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DEUTSCHEMARK DOMINANCE OF EMS CURRENCIES: EVIDENCE FROM DAILY SPOT EXCHANGE RATES

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This study investigates the German dominance hypothesis from the perspective of foreign exchange rates within the EMS. The findings indicate that the value of the German deutschemark affects the values of other EMS currencies more than values of the other currencies affect the deutschemark. Bi-directional effects exist, however, and the mark is not independent of the remaining EMS currencies. Further, the strength of the mark in determining values of the other currencies appears to have strengthened since the German reunification.

Abstract

INTRODUCTION

METHODOLOGY

DATA SELECTION AND APPLICATION

EMPIRICAL RESULTS

AN EXTENSION

SUMMARY AND CONCLUSIONS

ENDNOTES

REFERENCES

BIOGRAPHIES

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