Abstract

This paper treats determination of neutral or natural interest rate in CFA zone and under zone UEMOA and CEMAC. Methodology used is based on a generalized Taylor rule derived from the goals of monetary policies and budgetary attaches with a quadratic function of reaction which takes into account a target of inflation, public expenditure and interest rate. The estimates highlight a neutral interest rate between 1.4 - 1.6%. In addition, it is observed that overall the level of natural interest rate in zone UEMOA (1.51) is lower than in zone CEMAC (1.65). It notices a larger homogeneity in CEMAC zone than UEMOA zone.

Key words: Taylor rule, Kalman filter, natural interest rate, monetary policy, panel data, central bank reaction function.