The objective of this paper is to get some insight into the process of
real convergence between European countries. Emphasizing the stationa
ry context of the data and the importance of synchronization of the re
al performances with Germany, we propose a new concept of convergence
based on the notion of Codependence introduced by Gourieroux and Peauc
elle (1989). Our empirical analysis produces some interesting results,
which do not reject the hypothesis that some degree of the erosion of
the credibility for some currencies during the period of the new EMS
may be due to the emergence of real divergences with Germany. (C) 1998
Society for Policy Modeling. Published by Elsevier Science Inc.