Cross-Border Deposits and Monetary Aggregates in the Transition to EMU

ByIgnazio Angeloni, Aviram Levy, Carlo Cottarelli

November 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses the effect of cross-border deposits (CBDs) for the stability of the relation between monetary aggregates and nominal GDP in the five largest EC countries. The analysis is developed in terms of “information content” of alternative money definitions (including or excluding selected subsets of CBDs), derived from a multicountry simultaneous system of money demand equations. We show that in the most recent period traditional money aggregates have lost information value and that they are dominated by alternative money definitions that include CBDs, such as those based on the residency of the holder or on the currency of denomination.

Subject: Currencies, Demand for money, Monetary aggregates, Monetary base, Money, National accounts, Personal income

Keywords: aggregate broad money money stock, correlation coefficient, Currencies, Demand for money, Europe, foreign currency, income equation, Monetary aggregates, Monetary base, monetary policy, money demand, money stock statistic, narrow money definition, Personal income, standard error, stock definition, WP

Pages:
60
Volume:
1991
DOI:
https://doi.org/10.5089/9781451853742.001
Issue:
114
Series:
Working Paper No. 1991/114
Stock No:
WPIEA1141991
ISBN:
9781451853742
ISSN:
1018-5941

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