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Assessing the Effects of Policy Changes: Lesson from the European 1992 Experience

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  • Pierre-Yves HENIN
  • Marie PODEVIN

Abstract

The paper focuses on the experience of the EMS breakdown in September 1992 as a 'crucial experiment', allowing to identify subsequent changes in policy rules and to assess the invariance of private agents' behaviour to these changes. After a brief summary of the facts, the breakdown and the aftermath, we provide estimates of the change in monetary and budget policy rules for Germany (the benchmark), two 'stayers' (France and the Netherlands) and three 'leavers' (Italy, Spain and the UK). Finally, we perform tests of super exogeneity and invariance of reduced form equations for real activity, inflation and the term structure of interest rates.

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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2002)
Issue (Month): 67-68 ()
Pages: 435-461

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Handle: RePEc:adr:anecst:y:2002:i:67-68:p:16

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Cited by:
  1. Kai Leitemo, 2006. "Open-Economy Inflation-Forecast Targeting," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 7, pages 35-64, 02.
  2. Enrico Tanuwidjaja & Choy Keen Meng, 2005. "Central Bank Credibility and Monetary Policy : Evidence from Small Scale Macroeconomic Model of Indonesia," Macroeconomics Working Papers 22576, East Asian Bureau of Economic Research.

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