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The British opt-out from the European Monetary Union: empirical evidence from monetary policy rules

  • Stefano d'Addona

    ()

    (Department of International Studies, University of Rome 3)

  • Ilaria Musumeci

    (Department of International Studies, University of Rome 3)

We analyze the current state of monetary integration in Europe, focusing on the United Kingdom’s position regarding the European Monetary Union (EMU). The interest rate decisions of the European Central Bank and the Bank of England are compared through different specifications of the Taylor rule. Comparison of the monetary conduct of these two institutions provides useful guidance in identifying the differences that the British Government claims motivating its refusal to join the EMU. Testing for forward-looking behavior and possible asymmetries in policy responses, we show evidence supporting the opt-out decision taken by the British Government.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 225.

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Length: 38 pages
Date of creation: 26 Mar 2012
Date of revision: 26 Mar 2012
Handle: RePEc:rtv:ceisrp:225
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  1. Dolado, Juan J. & María-Dolores, Ramón & Ruge-Murcia, Francisco J., 2002. "Non-Linear Monetary Policy Rules: Some New Evidence for the US," CEPR Discussion Papers 3405, C.E.P.R. Discussion Papers.
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  15. Dolado, Juan J. & Maria-Dolores, Ramon & Naveira, Manuel, 2005. "Are monetary-policy reaction functions asymmetric?: The role of nonlinearity in the Phillips curve," European Economic Review, Elsevier, vol. 49(2), pages 485-503, February.
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