eation of the EMS resulted in a higher level of economic integration among those countries participating in the exchange rate mechanism (ERM) of the EMS. Most economic models account for the international transmission of price changes, to some extent, through export prices (Branson, 1975). In these models, it is typically assumed that changes in export prices in one economy will transmit price changes in that economy to those economies to which its goods are exported. The extent to which price changes are transmitted from one economy to another, therefore, depends, at least in part, on the level of trade between the two economies, and the proportion of the imported goods to total consumption in the importing economy (Johnson, 1975). In part, the level of trade between two economies depends upon the needs of each of the economies, and on the capabilities of the economies to purchase goods from other economies. The capabilities of economies to purchase from other economies and, particularly, the willingness of economies to purcha
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