Portfolio Redistribution Impacts within the Narrow Monetary Aggregate

Jean Gauger

Journal of Money, Credit and Banking, 1992, vol. 24, issue 2, 239-57

Abstract: A number of important monetary and financial changes occurred in the 1980s. A rising question among monetary economists is whether the character of M1 has changed substantially as a result. In particular, a frequent contention is that interest-bearing checkable deposits behave as a savings-type asset, thus subjecting M1 to portfolio redistribution effects in the modern era. This research examines the elasticities of substitution for a variety of financial assets pre- and post-1980. Results indicate that M1 subcomponents do show significant substitution with savings-type assets. However, the portfolio redistribution impacts are not confined to the interest-bearing checkable deposits. Further, results indicate that this behavior is not unique to the 1980s. Copyright 1992 by Ohio State University Press.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:24:y:1992:i:2:p:239-57

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