We examine the mean-reverting properties of real exchange rates, by comparing the unit root properties of a group of international real exchange rates with two groups of intra-national real exchange rates. Strikingly, we find that while the international real rates taken as a group are...

Data on output and prices for eleven EC member nations are analysed using a VAR decomposition to extract information on underlying aggregate supply and demand disturbances. The coherence of the underlying shocks across countries and the speed of adjustment to these shocks are compared with the...

A model of optimum currency areas is presented using a general equilibrium model with regionally differentiated goods. The choice of a currency union depends upon the size of the underlying disturbances, the correlation between these disturbances, the costs of transactions across currencies,...

Two issues are discussed. The first is which countries might benefit from entry into EMU before the millennium. Germany and her immediate neighbours appear the most likely to gain; our knowledge is too uncertain to say whether all, some, or no countries would reap net economic benefits, however....

We use time-series methods to estimate a simple aggregate supply and demand model in order to analyse the comparative performance of fixed and flexible exchange rate systems and test competing hypotheses designed to explain shifts between exchange rate regimes. The paper provides a coherent...

The size and economic relevance of Europe may imply a new role for the EURO in the international financial markets. But will the EURO compete with the $US and the Yen for a place in the basket of international currencies? Will that induce a bipolar or indeed tri-polar system, and with what...

This paper examines the appreciation of the dollar over the period 1980-85. The standard theories try to explain the increased demand for dollar assets by differential rates of return on bonds or by "safe-haven" arguments associated with the lower riskiness of United States assets. Neither of...

*The European Union will enter Stage Three of Economic and Monetary Union (EMU) in 1999. The development of euro financial markets and thickness externalities in the use of the euro as means of payment will be the major factors determining the importance of the euro as an international currency....

Monetary arrangements in Europe vacillated wildly over the last decade, and they may be expected to continue to do so over the next. The literature on this chaotic process has focused on issues of credibility. Here, we focus instead on the longer-run implications of Europe's choice of monetary...

The aim of this paper is to isolate and measure the respective importance of political and economic aspects in two critical episodes of the French inter-war period: the stabilization process of the mid-1920s and the reluctance to abandon the gold standard during the 1930s. We do this by...