The Implications of Cross-Border Monetary Aggregation
September 1, 1992
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Summary
Some recent studies suggest the possibility of estimating a stable aggregate demand-for-money relationship for the group of countries participating in the European Monetary System. These results are of particular relevance in connection with the task of setting policy targets for a European Central Bank. This paper uses a theoretical error-invariables framework to identify what is gained and what may be lost through cross-border aggregation of money demand. It provides an analytical basis for such studies, paying particular attention to currency substitution and international portfolio diversification.
Subject: Currencies, Demand for money, Dollarization, Monetary policy, Money, National accounts, National income, Personal income
Keywords: aggregate demand, aggregate money demand disturbance, Currencies, Demand for money, disequilibrium money holding, Dollarization, measurement error, money demand, money demand equation, National income, Personal income, portfolio diversification, WP
Pages:
22
Volume:
1992
DOI:
Issue:
071
Series:
Working Paper No. 1992/071
Stock No:
WPIEA0711992
ISBN:
9781451959789
ISSN:
1018-5941
Notes
This paper uses a theoretical error-invariables framework to identify what is gained and what may be lost through corss-border aggregation of money demand.
