TY  - JOUR
AU  - Bates,David S.
TI  - Financial Markets' Assessment of EMU
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6874
PY  - 1999
Y2  - January 1999
UR  - http://www.nber.org/papers/w6874
L1  - http://www.nber.org/papers/w6874.pdf
N1  - Author contact info:
David S. Bates
Henry B. Tippie College of Business
Department of Finance
University of Iowa
Iowa City, IA 52242-1000
Tel: 319/353-2288
Fax: 319/335-3690
E-Mail: david-bates@uiowa.edu
AB  - This article reviews the assumptions and methodologies underlying EMU probability calculators,' which infer from financial data the probability of specific countries joining the European Monetary Union.  Some historical evidence is presented in support of the expectations hypothesis for intra-European interest rate differentials underlying most calculators, while various potential biases are deemed negligible.  The various EMU calculators differ primarily in their scenarios for intra-European interest rate differentials conditional upon EMU not occurring.  This article also discusses what can be inferred from financial data regarding future policies of the European Central Bank.
ER  -