Monetary policies of developed countries: co-ordination, coercion or independence

The international linkages between money stocks (and inflation rates) has received much attention. Focuses on the advantages and disadvantages of fixed and flexible exchange rate regimes. Fixed rate systems require credible commitments to the rules of the game by the central banks involved. Credible commitment can be achieved through cooperative (symmetric) or coercive (asymmetric) regimes. Did the USA (Germany) dominate other developed (European) countries during the Bretton Woods (European Monetary) system? Examines the linkages, if any, between the USA (German) money stock and money stocks in other developed (European) countries, using the cointegration and error-correction methodology. Finds evidence that USA (German) money stock did affect other (European) countries' money stocks during fixed exchange rates. Finds, also, reverse causality which raises serious questions about either the dominance of the USA (Germany) within the Bretton Woods (European Monetary) system, or the usefulness of causality tests is answering such questions.EMS, Exchange rates, Germany, USA