German Unification and the EMS: A Non-Parametric Approach to the Asymmetry Question

This paper attempts to analyze the impact of German unification on the position that Germany holds within the European Monetary System (EMS), i.\ e.\ on the asymmetry in the EMS. Applying kernel estimation and bootstrap methods we can corroborate the result of previous studies that Germany's position within the EMS was not weakened by German unification when speculative periods before and after German unification are compared. Moreover, our data exhibit significant non-linearities pointing to threshold cointegration or regime switching processes.