IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/62293.html
   My bibliography  Save this paper

Regional exchange rate arrangements in a world of floating rates: The experience of the EMS

Author

Listed:
  • Galy, Michel

Abstract

This paper reviews the economic and monetary impacts of the creation of the 1979 European Monetary System on the participating countries and shows that they did not meet all the required theoretical criteria for a successful monetary integration process. Despite this handicap, the 1979 monetary arrangement has succeeded in stabilizing nominal exchange rates and in fostering a move towards a greater co-ordination of monetary policies between some participating countries. On the other hand, the stabilization of nominal exchange rates was accompanied by a lasting decline in the competitiveness of some member countries with a consecutive weakening effect on their economies. However, the relative deflationary impact that was anticipated by some authorities at the outset for the monetary union as a whole has not yet materialized.

Suggested Citation

  • Galy, Michel, 1982. "Regional exchange rate arrangements in a world of floating rates: The experience of the EMS," MPRA Paper 62293, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62293
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/62293/1/MPRA_paper_62293.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Frenkel, Jacob A. & Rodriguez, Carlos A., 1980. "Exchange Rate Dynamics and Overshooting Hypothesis," Foerder Institute for Economic Research Working Papers 275323, Tel-Aviv University > Foerder Institute for Economic Research.
    2. Fair, Ray C, 1982. "Estimated Output, Price, Interest Rate, and Exchange Rate Linkages among Countries," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 507-535, June.
    3. Thomas Willett & Edward Tower, 1970. "Currency areas and exchange-rate flexibility," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 105(1), pages 48-65, September.
    4. Turnovsky, Stephen J, 1976. "The Relative Stability of Alternative Exchange Rate Systems in the Presence of Random Disturbances," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 8(1), pages 29-50, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Galy, Michel, 1987. "A synthetic indicator for the currencies of the G5 countries," MPRA Paper 62487, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dale Henderson, 1984. "Exchange Market Intervention Operations: Their Role in Financial Policy and Their Effects," NBER Chapters, in: Exchange Rate Theory and Practice, pages 359-406, National Bureau of Economic Research, Inc.
    2. Miller, Norman C., 1995. "Towards a loanable funds/amended-liquidity preference theory of the exchange rate and interest rate," Journal of International Money and Finance, Elsevier, vol. 14(2), pages 225-245, April.
    3. Joshua Aizenman, 1984. "Optimal Wage Re-Negotiation," NBER Working Papers 1279, National Bureau of Economic Research, Inc.
    4. Stanley Black, 1984. "The Relationship between Exchange Rate Policy and Monetary Policy in Ten Industrial Countries," NBER Chapters, in: Exchange Rate Theory and Practice, pages 499-516, National Bureau of Economic Research, Inc.
    5. Papazoglou, Christos & Pentecost, Eric J., 2004. "The dynamic adjustment of a transition economy in the early stages of transformation," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 547-561, September.
    6. Buiter, Willem H. & Miller, Marcus, 1980. "Monetary Policy And International Competitiveness," Economic Research Papers 269135, University of Warwick - Department of Economics.
    7. Rodriguez, Carlos Alfredo, 1991. "The macroeconomics of the public sector deficit : the case of Argentina," Policy Research Working Paper Series 632, The World Bank.
    8. Rodriguez, Carlos Alfredo, 1989. "The external effects of public sector deficits," Policy Research Working Paper Series 299, The World Bank.
    9. Engel, Charles, 2001. "Optimal Exchange Rate Policy: The Influence of Price Setting and Asset Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 518-541, May.
    10. Papell, David H., 1984. "Activist monetary policy and exchange-rate overshooting: The Deutsche mark/dollar rate," Journal of International Money and Finance, Elsevier, vol. 3(3), pages 293-310, December.
    11. Goldberg, Michael D., 2000. "On empirical exchange rate models: what does a rejection of the symmetry restriction on short-run interest rates mean?," Journal of International Money and Finance, Elsevier, vol. 19(5), pages 673-688, October.
    12. Chu, Quentin C. & Ding, David K. & Pyun, C. S., 1997. "The opening price behavior: Foreign exchange futures market versus equity market," International Review of Financial Analysis, Elsevier, vol. 6(1), pages 21-35.
    13. Francesco Paolo Mongelli, 2008. "European Economic and Monetary Integration, and the Optimum Currency Area Theory," European Economy - Economic Papers 2008 - 2015 302, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    14. Jacob A. Frenkel & Assaf Razin, 1984. "Fiscal Policies, Debt, and International Economic Interdependence," NBER Working Papers 1266, National Bureau of Economic Research, Inc.
    15. Rosmy Jean Louis & Mohamed Osman & Faruk Balli, 2010. "Is the US Dollar a Suitable Anchor for the Newly Proposed GCC Currency?," The World Economy, Wiley Blackwell, vol. 33(12), pages 1898-1922, December.
    16. Dominique Hachette & Fernando Ossa & Francisco Rosende, 1996. "Aspectos Monetarios y Macroeconómicos de la Integración," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 33(98), pages 153-183.
    17. Barry Eichengreen & Charles Wyplosz, 1986. "The Economic Consequences of the Franc Poincare," NBER Working Papers 2064, National Bureau of Economic Research, Inc.
    18. Richard C. Marston, 1984. "Exchange Rate Unions as an Alternative to Flexible Rates: The Effects of Real and Monetary Disturbances," NBER Chapters, in: Exchange Rate Theory and Practice, pages 407-442, National Bureau of Economic Research, Inc.
    19. Constantinos Alexiou & Joseph Nellis, 2012. "Is the EURO' a Defunct Currency?," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 296-303.
    20. Koray, Faik & McMillin, W. Douglas, 1999. "Monetary shocks, the exchange rate, and the trade balance," Journal of International Money and Finance, Elsevier, vol. 18(6), pages 925-940, December.

    More about this item

    Keywords

    European Monetary System; Optimum currency area; Monetary policy; Monetary Integration; Fixed exchange rates; floating exchange rates; Effective exchange rate indices;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:62293. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.