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A preliminary for European monetary union is convergence of the European Moneta y System's members' policies. Using a cointegration framework with short-term interest rates and monetary bases as monetay policy measures, wejind policy convergence has not occurred. Nor, contrary to popular belief, does the Bundesbank dominate other members' policies. Although the Bundesbank is influential, substantial policy interaction occurs among almost all the EMS countries examined. Finally, the "credibility" argument, that pegged exchange rate systems constrain and discipline monetay policymakers behavior, is undermined by our findings.

Substantially less work has been conducted this framework for countries other than the States. 2 Consequently, it is uncertain whether Louis approach can be used universally in evaluating the economic impact of monetary and fiscal actions on income growth. This study investigates the generality of the St. Louis approach by applying it to other countries. Based on evidence generated from the study of six developed countries-Canada, France, Germany, Japan, the U.nited Kingdom and the United Stateswe conclude that money growth is more important than fiscal actions in determining GNP growth. Moreover, our results are robust across the "fixed" and "flexible' exchange rate regimes that characterized the past two decades ESTIMATING THE ST. LOUIS LQI. %'IL\ t(BO's (01\IBII S The St. Louis equation typically estimated for the United States consists of only three variables: nominal 2 Two exceptions are Michael W7, Keran, "Monetary and F'iscal influences on Economic Activity: The Foreign Experience." this Review

There is an emerging consensus that money can be largely ignored in making monetary policy decisions. Svensson (1999, 2002) provide some empirical support for this view. In this paper, we reconsider the role of money. We find that money is not redundant. More specifically, there is a significant statistical relationship between lagged values of money and the output gap, even when lagged values of real interest rates and lagged values of the output gap are accounted for. We further test for and find significant information useful in predicting movements in the output gap arise from movements in both inside and outside money.

PurposeThe purpose of this paper is to test whether entrepreneurship is a significant factor in explaining economic growth at the state level.Design/methodology/approachThis paper, unlike previous work, uses the Kauffman Index of Entrepreneurial Activity (KIEA) as the measure of entrepreneurial activity. Based on standard growth regressions using real per capita gross state product, real per capita personal income and employment growth, we test for the independent role that entrepreneurial activity may have on state economic growth.FindingsWe find that an increase in the level of entrepreneurial activity is robustly associated with an increase in economic growth. Such findings reinforce calls for policy changes at the state level that promote more productive entrepreneurship.Research limitations/implicationsThese conclusions are tentative. The findings are based on the growth of the 50 states over a relatively short period. A longer data set would be preferable, if data were available. Moreover, the author has not attempted to distinguish between different categories of entrepreneurship, for example productive and unproductive entrepreneurship.Practical implicationsSuch findings reinforce calls for policy changes at the state level that promote more productive entrepreneurship. This would include, among others, changes such as reducing or eliminating state income taxes and setting strict limits on the government's use of eminent domain and environmental property takings.Originality/valueThe study uses the Kauffman Index of Entrepreneurial Activity (KIEA), arguably a superior measure of state‐level entrepreneurial activity, to explain state economic growth. The topic is timely and the results have important policy implications.