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


Reference:

Camarero, M. and Ordóñez, J., 2001. Who is ruling Europe? Empirical evidence on the German dominance hypothesis. Empirical Economics, 26 (4), pp. 623-650.

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Official URL:

http://dx.doi.org/10.1007/s001810100075

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.

Details

Item Type Articles
CreatorsCamarero, M.and Ordóñez, J.
DOI10.1007/s001810100075
DepartmentsFaculty of Humanities & Social Sciences > Economics
RefereedYes
StatusPublished
ID Code26188

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