Testing for real interest rate convergence in European countries
View/ Open
Date
1998-01Author
Fountas, Stilianos
Metadata
Show full item recordUsage
This item's downloads: 907 (view details)
Recommended Citation
Fountas, S. (1998). "Testing for real interest rate convergence in European countries" (Working Paper No. 024) Department of Economics, National University of Ireland, Galway.
Abstract
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.