Estimating Policy-Invariant Technology and Taste Parameters in the Financial Sector, When Risk and Growth Matter

This paper provides an approach to estimation of taste and technology parameters in the financial sector through Euler equation estimation under exact monetary aggregation conditions. This is the original working paper, which produced the more condensed version published in the November 1995 edition of the Journal of Money, Credit and Banking. That special edition of the JMCB contains the proceedings of the Cleveland Federal Reserve Bank September 1994 conference on Liquidity, Monetary Policy, and Financial Intermediation. At the end of this working paper is our submitted reply to the comments of one of the discussants. The journal proceedings volume includes the published comments of that discussant, but not our reply to that discussant (who also is an editor of the journal.....).