ABSTRACT Currency substitution has important implications for the cost of European monetary union... more ABSTRACT Currency substitution has important implications for the cost of European monetary union--if it is significant it will help to reduce costs of convergence to a single currency. This paper informs the policy debate by testing for its existence on a consistent European database making use of cointegration methods. The results demonstrate that, in the two types of models tested, there is no clear evidence of currency substitution in either the short or the long run and that, therefore, currency substitution between sterling and EC currencies cannot be relied upon as a mechanism or an aid to reduce the costs of monetary convergence. Copyright 1994 by Royal Economic Society.
Page 1. KfJrRZERE AUFS.ATZE • KOMMENTARE ... There is some evidence from North America (de Vries ... more Page 1. KfJrRZERE AUFS.ATZE • KOMMENTARE ... There is some evidence from North America (de Vries 1988; Ratti and Jeong 1994) which provides support for the influence of trade effects on currency substitution, but there is no evidencr avail-able for the European Union. ...
ABSTRACT Currency substitution has important implications for the cost of European monetary union... more ABSTRACT Currency substitution has important implications for the cost of European monetary union--if it is significant it will help to reduce costs of convergence to a single currency. This paper informs the policy debate by testing for its existence on a consistent European database making use of cointegration methods. The results demonstrate that, in the two types of models tested, there is no clear evidence of currency substitution in either the short or the long run and that, therefore, currency substitution between sterling and EC currencies cannot be relied upon as a mechanism or an aid to reduce the costs of monetary convergence. Copyright 1994 by Royal Economic Society.
Page 1. KfJrRZERE AUFS.ATZE • KOMMENTARE ... There is some evidence from North America (de Vries ... more Page 1. KfJrRZERE AUFS.ATZE • KOMMENTARE ... There is some evidence from North America (de Vries 1988; Ratti and Jeong 1994) which provides support for the influence of trade effects on currency substitution, but there is no evidencr avail-able for the European Union. ...
Uploads
Papers