Currency Substitution and Cross-Border Monetary Aggregation: Evidence From the G-7
IMF Working Papers, October 1, 1992
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- Currency Substitution and Cross-Border Monetary Aggregation: Evidence From the G-7
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Bibliographic details
- Authors: Timothy D. Lane, Stephen S. Poloz
- Published: October 1, 1992
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451955040.001
Overview
- Research focus: Whether there is a stable aggregate money demand relationship for Europe; if so, why, and if not, why not.
- Policy relevance: Implications for implementation of policy by a European central bank and for the appropriate speed of transition to EMU.
- Study design: Multi-country empirical study of money demand for the G-7 countries during the period since 1973.
- Core empirical aims:
- Look for evidence of currency substitution.
- Test the restrictions implied by cross-border aggregation within Europe.
Research questions and scope
- Primary questions:
- Is there a stable aggregate money demand relationship for Europe?
- What explains stability or instability in such a relationship?
- Geographic and temporal scope:
- G-7 countries.
- Period covered: since 1973.
Methods and analytical approach
- Type of analysis: Multi-country empirical study of money demand.
- Specific empirical focuses (as indicated by keywords):
- Testing aggregate equation and aggregation restriction.
- Cross-equation restriction and testing equation procedures.
- Use of dynamic error correction equation and analysis of error correction variable.
- Examination of currency substitutability and currency substitution.
- Related technical elements highlighted in keywords:
- Canada equation, non-European equation, critical value, test statistic, equation result.
Key themes, subjects, and keywords
- Subjects listed:
- Currencies, Demand for money, Dollarization, Exchange rates, Foreign exchange, Monetary policy, Money, National accounts, Personal income
- Keywords (indicative of methods and focal points):
- aggregate equation, aggregation restriction, Canada equation, critical value, cross-equation restriction, Currencies, currency substitutability, currency substitution, Demand for money, Dollarization, dynamic error correction equation, equation result, error correction variable, Europe, Exchange rates, money demand equation, non-European equation, Personal income, test statistic, testing equation, WP