Semi-Nonparametric Estimates of Currency Substitution: The Demand for Sterling in Europe

21 Pages Posted: 21 Aug 2004

See all articles by Leigh M. Drake

Leigh M. Drake

affiliation not provided to SSRN

Adrian R. Fleissig

California State University, Fullerton - Department of Economics

Abstract

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.

Suggested Citation

Drake, Leigh M. and Fleissig, Adrian R., Semi-Nonparametric Estimates of Currency Substitution: The Demand for Sterling in Europe. Available at SSRN: https://ssrn.com/abstract=573069

Leigh M. Drake (Contact Author)

affiliation not provided to SSRN

Adrian R. Fleissig

California State University, Fullerton - Department of Economics ( email )

Fullerton, CA 92834
United States

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