Erm Money Supplies and the Transition to Emu

42 Pages Posted: 15 Feb 2006

See all articles by Marcel Cassard

Marcel Cassard

affiliation not provided to SSRN

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Date Written: January 1994

Abstract

Stage 2 of monetary union in the Europe is to involve greater monetary cooperation; the paper examines the case for using the M3 money supply aggregated across "core ERM" countries--those with low inflation and absence of realignments--as a vehicle for that cooperation. First, the existence of a satisfactory long-run money demand relationship and short-run dynamic equation is verified. The resulting demand equations have at least as satisfactory econometric properties as those for France and Germany separately. Second, the predictive power of the core-ERM aggregate relative to French and German inflation is examined; it is shown that the aggregate helps to predict German inflation, over and above the predictive power of German M3. Thus, core-ERM M3 has value as an indicator for the anchor country in hitting its own domestic objective, quite separate from any concern about economic developments in neighboring countries.

JEL Classification: E41, E50

Suggested Citation

Cassard, Marcel and Lane, Timothy and Masson, Paul R., Erm Money Supplies and the Transition to Emu (January 1994). IMF Working Paper No. 94/1, Available at SSRN: https://ssrn.com/abstract=883411

Marcel Cassard (Contact Author)

affiliation not provided to SSRN

No Address Available

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-7648 (Phone)
202-623-4405 (Fax)

Paul R. Masson

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

The Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
202-797-6278 (Phone)
202-797-2968 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
52
Abstract Views
929
rank
471,210
PlumX Metrics