Macroeconomic Shocks, the ERM, and Tri-Polarity

Tamim Bayoumi and Mark Taylor

No 711, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse the importance of ERM membership for macroeconomic performance by comparing the behaviour of real output growth and inflation of members and non-members of the ERM. Taking the traditional aggregate supply and demand model as the basis for the analysis, we propose and implement an econometric procedure for identifying aggregate demand and supply shocks. The results confirm that the ERM has acted as a vehicle for macroeconomic policy coordination among its members. We also investigate several issues relating to the notion of a `tri-polar' global economic system comprising Germany, Japan and the US.

Keywords: ERM; Macroeconomic Performance; Tri-polarity (search for similar items in EconPapers)
JEL-codes: F33 F62 (search for similar items in EconPapers)
Date: 1992-09
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Citations: View citations in EconPapers (7)

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