European integration and asymmetry in the EMS

Merih Uctum

No 9605, Research Paper from Federal Reserve Bank of New York

Abstract: The empirical literature offers conflicting views of German dominance in the European Monetary System. We examine the validity of the German dominance hypothesis (GDH) by analyzing the responses of the European central banks and the money markets to monetary innovations originating both in Europe (European asymmetry) and abroad (international asymmetry). Our results reconcile the conflicting views in the literature. The GDH is confirmed when the analysis is conducted with intervention rates before the German unification. Results support European asymmetry with short rates before 1990 but not international asymmetry. After 1990 the GDH is not supported by either set of rates.

Keywords: European Monetary System (Organization); Europe (search for similar items in EconPapers)
Date: 1996
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Journal Article: European integration and asymmetry in the EMS (1999)
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