This paper models the time-varying mean of the UK real and nominal short-term interest rate. Both rates mean revert to a time-varying central tendency in continuous-time interest rate models. Before and during British membership in the ERM, the mean of the real and nominal short rate have a...

This paper models the time-varying mean of the UK real and nominal short-term interest rate. Both rates mean revert to a time-varying central tendency in continuous-time interest rate models. Before and during British membership in the ERM, the mean of the real and nominal short rate have a...

We analyse the importance of ERM membership for macroeconomic performance by comparing the behaviour of real output growth and inflation of members and non-members of the ERM. Taking the traditional aggregate supply and demand model as the basis for the analysis, we propose and implement an...

This paper, after reviewing briefly the early steps of European monetary integration and key elements of the EMU project as reflected in the Treaty of Maastricht, analyses the monetary integration strategy and convergence experience of member states, in particular that of Greece, in the 1990s...

A salient feature of recent currency speculations in the European Exchange Rate Mechanism is that the speculators can be big strategic players in the market, along with the central bank. This paper develops a game-theoretic model that captures this feature of the speculative market. For a regime...

This paper discusses what we have learned from last year's currency crises in the ERM and Nordic countries about fixed exchange rates as a means to achieve price stability. After discussing the explanations for the crises, the paper concludes that fixed exchange rates are not a short cut to...

This paper addresses the issue of the transition from Stage Two of EMU to Stage Three. The criteria established in the Maastricht Treaty for this transition include an ERM qualification. Under this criterion a participating country would have had to maintain its position in the normal bands of...

Most interpretations of the Exchange Rate Mechanism crisis of 1992/3 ignore the key role played by structural policy spillovers among European countries, and overlook the effects of coordination (or lack thereof) of monetary and exchange rate policies among the countries making up the periphery...