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Is the Bundesbank different from other central banks: A study based onP *

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Abstract

An important question for the future of European Monetary Union is whether the central banks of the European member states are fundamentally similar or are there real differences between them. Much casual evidence seems to suggest that the Bundesbank is fundamentally different in its method of operation from the other central banks. This paper attempts to find econometric evidence which may clarify this situation. It proceeds by drawing on theP * literature, which models the determination of inflation, and recent developments in the cointegration literature which allows a more complete treatment of causality than has hitherto been possible. It is argued that there does appear to be evidence that the Bundesbank operates in a qualitatively different way from the other Banks.

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Authors and Affiliations

  1. Department of Economics, Humboldt-University Berlin, Spandauer Str. 1, 10178, Berlin, Germany

    Michael Funke

  2. Centre for Economic Forecasting, London Business School, Regent's Park, Sussex Place, NW1 4SA, London, UK

    Stephen Hall

Authors
  1. Michael Funke
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  2. Stephen Hall
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Additional information

We would like to thank the referees of this journal for a number of helpful comments although of course all remaining errors are our sole responsibility. Financial support from ESRC grant No. W116251003 is gratefully acknowledged. The first author is also grateful to the German Research Council (Deutsche Forschungsgemeinschaft) for financial support under grant No. Fu 178/3-1.

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Funke, M., Hall, S. Is the Bundesbank different from other central banks: A study based onP * . Empirical Economics 19, 691–707 (1994). https://doi.org/10.1007/BF01205824

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  • DOI: https://doi.org/10.1007/BF01205824

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