Exchange Rates, Policy Convergence and the European Monetary System

Ronald MacDonald and Mark Taylor

No 444, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper we use a recently developed multivariate cointegration technique to analyse the degree of policy convergence of EMS member relative to that of some non-EMS countries. Interestingly, we find convergence for the nominal and real exchange rates and money supplies of the EMS members but not for the non-EMS countries. We also provide some evidence to support the `German leadership hypothesis' in the context of intra-EMS monetary policy convergence, which accords with anecdotal evidence on the modus operandi of the EMS.

Keywords: European Monetary System; Exchange Rates; Policy Convergence (search for similar items in EconPapers)
Date: 1990-08
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Citations: View citations in EconPapers (3)

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