The United Kingdom and the EMS

Michael Artis

No 353, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The reasoning effectively governing the UK's abstention from the EMS has changed over time. Reservations were based initially on fears for UK competitiveness and subsequently on a desire to exercise monetary autonomy in a counter-inflationary `medium-term financial strategy'. Difficulties with that strategy led to an interest both in policies to reduce exchange rate variability and in the EMS as an arrangement which could simultaneously serve this objective and provide a framework for controlling inflation. Commitment to an exchange rate reached its zenith in the 1987-8 episode of `DM shadowing'. This episode revealed an early example of the `excess credibility' problem. It suggests that if the UK were to participate fully in the EMS it might need to be prepared to make more active use of fiscal policy as a counter-inflationary instrument.

Keywords: European Monetary System; Inflation Control; Sterling Participation (search for similar items in EconPapers)
Date: 1989-11
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=353 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:353

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=353

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().