Citation

Discussion Paper Details

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Title: Wages and Prices in Europe: A Test of the German Leadership Thesis

Author(s): Michael J Artis and Dilip M Nachane

Publication Date: March 1989

Keyword(s): European Monetary System, Inflation, Prices and Wages

Programme Area(s): International Macroeconomics

Abstract: The paper presents various tests of the hypothesis that, through the mechanism of the European Monetary System. Germany exercised a counter-inflationary leadership role in the 1980s. Evidence is provided that expectations of German inflation may be thought of as having impacted more strongly on expectations of inflation in other EMS countries in the EMS period than on non-EMS countries (the UK) and in earlier periods. Co-integration tests show inflation rates in partner EMS member countries to be cointegrated with inflation in Germany in the EMS period, but the same is true for the UK suggesting that the EMS arrangements could not have been responsible. Co-integration tests also reveal that bilateral exchange rates have not been particularly stable in this period and do not follow P.

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Bibliographic Reference

Artis, M and Nachane, D. 1989. 'Wages and Prices in Europe: A Test of the German Leadership Thesis'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=296