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...

This study shows how to construct monetary aggregates using a procedure to adjust the simple-sum, Divisia and empirical monetary aggregates to be consistent with weak separability. The corresponding adjusted monetary aggregates have considerable leading indicator information and provide the most...

This paper presents important new evidence on the monetary transmission mechanism in the context of the degree of substitution across UK monetary assets and consumption goods. Specifically, our empirical results show that durable goods expenditures are a relatively powerful element of the...

We estimate an asymptotically ideal model of the demand for UK personal sector monetary assets. We use data that are consistent with utility--maximizing behaviour, and find that UK monetary assets are generally substitutes in use. The estimated elasticities of substitution during the 1980s and...