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Asymmetric monetary policies? the case of Germany and France

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Author Info

  • Ulrich Camen
  • Hans Genberg
  • Michael Salemi

Abstract

How dissimilar are the policy objectives of the Bundesbank and the Banque de France and have those objectives converged since the conception of the EMS? We address these questions by estimating objective functions for the flexible-exchange-rate and the EMS periods. Vector autoregressions are used to characterize the economic environment and an inverse control methodology is used to infer the objectives of the central banks. We find that the Bundesbank's policy actions are compatible with its having consistently placed a high weight on the objective of price stability. The Banque de France on the other hand appears to have considered output stability to be an important target in the early EMS period. After a major French policy shift in 1982 the objectives of two Central Banks appear to be quite similar. Copyright Kluwer Academic Publishers 1991

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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 2 (1991)
Issue (Month): 3 (October)
Pages: 219-236

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Handle: RePEc:kap:openec:v:2:y:1991:i:3:p:219-236

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: Monetary policy; international monetary arrangements;

References

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  1. Gilles Oudiz & Jeffrey Sachs, 1985. "International Policy Coordination In Dynamic Macroeconomic Models," NBER Chapters, in: International Economic Policy Coordination, pages 274-330 National Bureau of Economic Research, Inc.
  2. Canzoneri, Matthew B. & Henderson, Dale W., 1988. "Is sovereign policymaking bad?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 28(1), pages 93-140, January.
  3. Canzoneri, Matthew B, 1985. "Monetary Policy Games and the Role of Private Information," American Economic Review, American Economic Association, vol. 75(5), pages 1056-70, December.
  4. Mélitz, Jacques, 1986. "The Prospect of a Depreciating Dollar and Possible Tension Inside the EMS," CEPR Discussion Papers 97, C.E.P.R. Discussion Papers.
  5. Fratianni, Michele & von Hagen, Juergen, 1990. "The European Monetary System ten years after," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 32(1), pages 173-241, January.
  6. Canzoneri, Matthew B & Gray, Jo Anna, 1985. "Monetary Policy Games and the Consequences of Non-cooperative Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 547-64, October.
  7. Michele Fratianni & Juergen Hagen, 1992. "German dominance in the EMS:The empirical evidence," Open Economies Review, Springer, Springer, vol. 3(1), pages 127-128, February.
  8. Michele Fratianni & Juergen Hagen, 1990. "German dominance in the EMS," Open Economies Review, Springer, Springer, vol. 1(1), pages 67-87, February.
  9. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(4), pages 1169-89, November.
  10. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 91(4), pages 589-610, August.
  11. Barro, Robert J., 1989. "Interest-rate targeting," Journal of Monetary Economics, Elsevier, Elsevier, vol. 23(1), pages 3-30, January.
  12. Giavazzi, Francesco, 1988. "Incentives to fix the exchange rate," European Economic Review, Elsevier, vol. 32(2-3), pages 382-387, March.
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Cited by:
  1. Robert Marti, 1995. "Spécification des préférences implicites en matière de politique économique française, 1981-1991," Économie et Prévision, Programme National Persée, vol. 119(3), pages 1-11.
  2. Joseph Daniels & David VanHoose, 1998. "Two-Country Models of Monetary and Fiscal Policy: What Have We Learned? What More Can We Learn?," Open Economies Review, Springer, Springer, vol. 9(3), pages 265-284, July.

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