Autoren: Alecke, B.

Hrsg.: Universität Münster: Volkswirtschaftliche Diskussionsbeiträge (308)

The aim of this paper is to provide empirical evidence on how the Bundesbank conducted monetary policy in the Bretton Woods era. Based on the long-run implications of the textbook model of a small open economy under fixed exchange rates cointegration analysis is applied, first, to estimat a long-run relationship between money, output, prices and interest rates and, second, to demonstrate that money can be regarded to be "Granger non-causal in the long-run". Furthermore, interest rate parity between German and U.S. interest rates is established showing that, in the long-run, the Bundesbank were forced to accept the rules of the game set by the U.S. Federal Reserve System.