The Demand for Financial Assets Held in the U.K. by the Overseas Sector: An Application of Two-Stage Budgeting

David Barr and K Cuthbertson

The Manchester School of Economic & Social Studies, 1994, vol. 62, issue 1, 1-20

Abstract: The authors model the portfolio choice between net sterling deposits, U.K. company securities, U.K. long-term government securities, and net foreign currency deposits held by the overseas sector in the United Kingdom. The authors assume the overseas sector uses two-stage budgetting whereby wealth is first distributed between total foreign and total sterling assets and then the latter are distributed across the three sterling assets. The long-run equations are based on the AIDS model and dynamics are modeled using an interdependent error-feedback model. The estimated model satisfies the theoretical restrictions of long-run homogeneity, symmetry, and homotheticity. Copyright 1994 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:62:y:1994:i:1:p:1-20

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