Citation

Discussion Paper Details

Please find the details for DP96 in an easy to copy and paste format below:

Full Details

Title: The Dynamic Stability of the European Monetary System

Author(s): Jacques Melitz and Philippe Michel

Publication Date: March 1986

Keyword(s): Coordinated Policy, Currency Realignment, European Monetary System, Leads And Lags, Stability and Transactions Balances

Programme Area(s): International Macroeconomics

Abstract: The European Monetary System (EMS) has proven to work remarkably well thus far, despite three major realignments. We make an attempt to explain the dynamic stability of the system. This attempt gives a central place to movements in desired transactions balances, or `leads and lags', as they are known. We assume the absence of pure speculation, although we examine this assumed absence after completing our main argument. Two important features of the EMS in our model, apart from leads and lags, are uncertainty of realignment dates and coordinated adjustments in interest rates by the central banks of the member governments.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=96

Bibliographic Reference

Melitz, J and Michel, P. 1986. 'The Dynamic Stability of the European Monetary System'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=96