Currency Substitution and the Demand for Money in Five European Union Countries
Julide Yildirim
Journal of Applied Economics, 2003, vol. 6, 361-383
Abstract:
The high degree of economic integration has led to an increased degree of currency substitution in the EU countries, which could bring instability in national money demand functions while an EU-wide money demand function could be more stable. Currency substitution usually takes the form of cross border deposits (CBD), which are not included in the traditional monetary aggregates. Thus, extended monetary aggregates that include the relevant CBDs are defined in this study. In order to investigate the implications of currency substitution for the stability of the demand functions, the traditional and extended monetary aggregates for five EU countries are defined in addition to EU-wide monetary aggregates. The estimated EU-wide demand for extended money appears to be stable suggesting that there is scope for monetary policy at the European level. However, the stability of the area-wide aggregate has been impaired when the relevant CBDs are not included.
Keywords: currency substitution; cross border deposits; extended monetary aggregates; demand for money; vector autoregression : (search for similar items in EconPapers)
JEL-codes: E41 E47 E52 F33 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
https://ucema.edu.ar/publicaciones/download/volume6/yildirim.pdf (application/pdf)
Related works:
Journal Article: Currency Substitution and the Demand for Money in Five European Union Countries (2003) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:6:y:2003:n:2:p:361-383
Access Statistics for this article
Journal of Applied Economics is currently edited by Germán Coloma and Mariana Conte Grand and Jorge M. Streb
More articles in Journal of Applied Economics from Universidad del CEMA Contact information at EDIRC.
Bibliographic data for series maintained by Valeria Dowding ().