The British Opt-Out from the European Monetary Union: Empirical Evidence from Monetary Policy Rules
37 Pages Posted: 28 Jul 2011 Last revised: 10 Mar 2012
There are 2 versions of this paper
The British Opt-Out from the European Monetary Union: Empirical Evidence from Monetary Policy Rules
The British Opt-Out from the European Monetary Union: Empirical Evidence from Monetary Policy Rules
Date Written: October 4, 2011
Abstract
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.
Keywords: Taylor rule; European monetary integration; Regime switching models; Interest rate smoothing.
JEL Classification: E32, E52, E38
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory
By Richard Clarida, Jordi Galí, ...
-
The Science of Monetary Policy: A New Keynesian Perspective
By Richard Clarida, Jordi Galí, ...
-
The Science of Monetary Policy: a New Keynesian Perspective
By Richard Clarida, Jordi Galí, ...
-
An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy: Expanded Version
-
Monetary Policy Rules in Practice: Some International Evidence
By Richard Clarida, Jordi Galí, ...
-
Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets