Who is ruling Europe? Empirical evidence on the German dominance hypothesis

Mariam Camarero, Javier Ordóñez

Research output: Contribution to journalArticle

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Abstract

The aim of this paper is to analyze the hypothesis of German dominance in the European Monetary System (EMS). For this purpose, we use monthly interest rates for nine European countries from January 1979 to the second half of 1997. In particular, we test the stability of the implied long-run relationships to assess whether there has been a significant change in the EMS performance. The econometric methodology is based on Johansen's maximum likelihood procedure and several tests for parameter instability. The most important finding is that, although Germany has a significant influence on the monetary policy of the other European countries, it is not possible to accept the existence of dominance.
LanguageEnglish
Pages623-650
Number of pages28
JournalEmpirical Economics
Volume26
Issue number4
DOIs
StatusPublished - 2001

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Monetary Policy
monetary policy
Interest Rates
Econometrics
interest rate
Long-run
econometrics
evidence
Maximum Likelihood
System Performance
Methodology
methodology
performance
Evidence
Empirical evidence
European countries
European Monetary System
Relationships
Influence
Maximum likelihood

Cite this

Who is ruling Europe? Empirical evidence on the German dominance hypothesis. / Camarero, Mariam; Ordóñez, Javier.

In: Empirical Economics, Vol. 26, No. 4, 2001, p. 623-650.

Research output: Contribution to journalArticle

Camarero, Mariam ; Ordóñez, Javier. / Who is ruling Europe? Empirical evidence on the German dominance hypothesis. In: Empirical Economics. 2001 ; Vol. 26, No. 4. pp. 623-650
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