of the commitment of participants in the ERM to maintain their parities against the Deutschmark, with Germany acting as a … low-inflation anchor. The paper finds evidence of such a credibility effect: during `the EMS period' (flexibly dated …) German inflation enters into autoregressive inflation predictor schemes for each of the main EMS countries (Belgium, France …

narrowed ahead of inflation divergence. Cross-country real interest rankings would then assume a negative correlation with the … corresponding inflation rankings. The paper argues that on theoretical grounds, a perverse correlation between real interest rates … and inflation can be predicted for `old EMS' conditions. Empirical evidence supports this prediction while failing to …

We set out a reference chronology for annual UK inflation, identifying nine complete cycles between 1958 and 1990 …. Inflation over this period is asymmetric, falling more quickly than it rises. Leading indicators are also proposed, with …, they give clear prior turning point information with relatively few `false signals'. Nevertheless, we find that inflation …

cointegrated with inflation in Germany in the EMS period, but the same is true for the UK suggesting that the EMS arrangements …The paper presents various tests of the hypothesis that, through the mechanism of the European Monetary System. Germany … exercised a counter-inflationary leadership role in the 1980s. Evidence is provided that expectations of German inflation may be …