Testing for Real Interest Rate Convergence in European Countries
We use cointegration tests that determine endogenously the regime shift to test for bilateral short-term and long-term real interest rate convergence in the European Monetary System in the 1979--1993 period. The results of these tests provide strong evidence in favour of bilateral real interest rate convergence between Germany and several countries in our sample, particularly for long-term real interest rates. This result carries the important policy implication that in several European countries monetary policy has lost some of its effectiveness as a stabilisation policy tool.
|Date of creation:||1998|
|Date of revision:||1998|
|Publication status:||Published in the Scottish Journal of Political Economy, Vol. 46, No. 2, 1999|
|Contact details of provider:|| Postal: St. Anthony's College, Newcastle Road, Galway|
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