Credibility and Inflation Expectations in the European Monetary System

Nicholas Sarantis

Chapter 5 in Economic Integration, 2002, pp 77-90 from Palgrave Macmillan

Abstract: Abstract Although the original emphasis of the European Exchange Rate Mechanism (ERM) was on exchange rate stability, recent experience suggests that the focus shifted during the 1980s towards the achievement of lower and stable inflation rates in the European Community. The counterinflationary benefits of ERM membership are understood to arise primarily from a credibility effect on the formation of domestic inflation expectations.

Keywords: Ation Rate; Unit Labour Cost; European Monetary System; Credibility Theory; CEPR Discussion Paper (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62925-7_5

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DOI: 10.1057/9780230629257_5

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