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...

The paper aims to develop understanding of why and how central banks have intervened in foreign exchange markets, and whether intervention was (i) coordinated, (ii) sterilized, and (iii) effective. The experience in the G-3 context is compared with the past EMS experience. In addition to foreign...

The impact of exchange rate fluctuations on international trade has long been a major concern for policy-makers. This is particularly the case in Europe, where countries trade extensively with each other. The crisis that began in the Summer of 1992 generated increased exchange rate fluctuations...

This paper studies monetary policy games in a two-period Mundell-Fleming model, under a regime of managed exchange rates. A regime of managed exchange rates is defined as one where exchange rates are pegged but bilateral parities can be changed from time to time. The paper argues that such a...

Using annual data drawn from 1963-1983 we estimate an econometric model of the balance of payments of oil-importing LDCs. The model consists of equations for the quantities of exports and imports, unit value indices for exports and imports, capital flows, reserves and the exchange rate. An...

This paper addresses the question of whether the European Monetary System can be copied outside Europe. Our answer is negative. The presence of the EC and the dependence of EC institutions on exchange rate stability lend credibility to EMS exchange rate targets in a way that would not be...

The paper extends the recent literature on the collapse of managed exchange-rate regimes by allowing explicitly for the government budget constraint and the interest cost of servicing the public debt. The policy experiment analysed in this paper is the decision by a government to replenish its...

The paper investigates four challenges to exchange rate stability in the coming years and explores their implications for macroeconomic and exchange rate policy. The first section explores the importance of seigniorage in financing the government budget in Southern European countries. The second...

The international monetary system has passed through a succession of phases characterized alternatively by the dominance of fixed and flexible exchange rates. How are these repeated shifts between fixed and flexible rate regimes to be understood? The present paper specifies and tests six...

This paper is a selective survey of new or recent methods to extract information about market expectations from asset prices for monetary policy purposes. Traditionally, interest rates and forward exchange rates have been used to extract expected means of future interest rates, exchange rates...