DP448 EMU and Asymmetries and Adjustment Problems in the EMS

Author(s): Axel A Weber
Publication Date: August 1990
Keyword(s): Economic Integration, Europe, European Monetary System, Exchange Rates, Monetary Policy
JEL(s): F15, F33, O52
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=448

The paper empirically analyzes asymmetries in the EMS with special reference to their implication for the creation of a monetary union (EMU). Two types of asymmetries are analyzed: those in the form of "German dominance" are detected in the conduct of monetary policies in the EMS, in particular when the concept of "Granger causality" is applied in vector autoregressions using money-market interest rates through which most of the short-term policy impulses are transmitted; and second, asymmetries in the shocks to macroeconomic variables are discussed.