Currency Substitution and Cross-Border Monetary Aggregation: Evidence From the G-7
October 1, 1992
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Summary
Is there a stable aggregate money demand relationship for Europe? If so, why, and if not, why not? These questions are important for the implementation of policy by a European central bank, as well as for the appropriate speed of transition to EMU. This paper addresses them in a multi-country empirical study of money demand for the G-7 countries during the period since 1973. It looks for evidence of currency substitution and tests the restrictions implied by cross-border aggregation within Europe.
Subject: Currencies, Demand for money, Dollarization, Exchange rates, Foreign exchange, Monetary policy, Money, National accounts, Personal income
Keywords: 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
Pages:
36
Volume:
1992
DOI:
Issue:
081
Series:
Working Paper No. 1992/081
Stock No:
WPIEA0811992
ISBN:
9781451955040
ISSN:
1018-5941
Notes
A multi-country empirical study of money demand for the G-7 countries during the period since 1973.
