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The British Opt-Out From The European Monetary Union: Empirical Evidence From Monetary Policy Rules

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  • Stefano D'Addona

    (University of Roma Tre)

  • Ilaria Musumeci

    (University of Roma Tre)

Abstract

We analyze the current state of the monetary integration in Europe focusing on the UK position regarding the European Monetary Union. The interest rates decisions of the European Central Bank and the Bank of England are compared through different specifications of the Taylor Rule. The comparison of the monetary conducts provides a useful feedback when looking for the differences claimed by the British government as motivating the UK refusal to join the European Monetary Union. Testing for a forward looking behavior and possible asymmetries in the policy responses, we show evidence supporting the opt-out by the UK monetary authorities.

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File URL: http://host.uniroma3.it/centri/crei/pubblicazioni/workingpapers2011/CREI_06_2011.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by CREI Università degli Studi Roma Tre in its series Working Papers with number 0611.

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Length: 32 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:rcr:wpaper:06_11

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Keywords: Taylor rule; European monetary integration; Regime switching models; Interest rate smoothing.;

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