The Implications of Cross-Border Monetary Aggregation

Download or read book The Implications of Cross-Border Monetary Aggregation written by Mr.Timothy D. Lane and published by International Monetary Fund. This book was released on 1992-09-01 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.