The EMS and price determination in Europe

Guglielmo Maria Caporale ()

No 37, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: The establishment of the ERM was one of a number of major institutional changes in Western Europe since the late‐1970s which may have changed the way in which prices are set and inflation is generated. The study reported in this paper applied co‐integration tests and tests of parameter stability to relationships estimated for most member states of the EC. The best results were obtained using the Wickens‐Breusch approach to estimate long‐run relationships. Stable relationships were found for seven countries, but not for four others. One possible explanation for the existence of structural breaks is a change in the way that expectations were formed, which would affect the regression parameters. Contact NIESR if copy required

Date: 1993-05
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:37

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