Semi-Nonparametric Estimates of Currency Substitution: the Demand for Sterling in Europe
The paper presents new evidence of significant substitution between European domestic monetary assets and foreign holdings of sterling. The finding of significant cross-country currency substitution implies reduced costs of transition towards monetary union and easier European policy convergence. Elasticities of substitution, using the Morishima measure, are estimated from the semi-nonparametric Fourier flexible form. Copyright Blackwell Publishing Ltd 2004.
Volume (Year): 12 (2004)
Issue (Month): 3 (08)
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