Portfolio redistribution impacts within the narrow monetary aggregate.: An article from: Journal of Money, Credit & Banking

by Jean Gauger

List Price:	~~$5.95~~
Amazon Price:	$5.95 & eligible for FREE Super Saver Shipping on orders over $25.
Lowest New Price:	$5.95
Availablitiy:	Available for download now

Editorial Reviews
Product Description
This digital document is an article from Journal of Money, Credit & Banking, published by Ohio State University Press on May 1, 1992. The length of the article is 8390 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the author: This research examines portfolio substitution behavior prior to the period of deregulation and financial innovation of the late 1970s and early 1980s, relative to recent asset substitution behavior. The results indicate that the M1 aggregate is subject to portfolio substitution effects in the modern era. Interest-bearing checkable deposits are one source of this behavior, showing significant substitution with the small time deposit and MMA components of net- M2. However, the portfolio substitution is not confined to OCDs. Currently and demand deposits also show significant substitution with savings, small time deposits, and MMAs. Results also indicate that portfolio redistribution effects are not a "1980s s phenomenon." Significant substitution existed between old M1 and savings-type assets prior to the widespread changes in financial markets. For the asset pairs common to both periods, elasticities of substitution did not change significantly over time. However, new assets in period two introduce important new sources of portfolio redistribution impacts. In particular, it appears that money market accounts are an important vehicle for portfolio substitution effects in the modern era. MMAs had highly significant and large-magnitude substitution elasticities with all other assets in the period two portfolio. In general, asset own-price elasticities have increased over time. The own-price responsiveness of M1 has increased substantially since the 1970s. This increase is not solely due to interest-bearing checkable deposits. M1A is also more own-price responsive in the 1980s than in the past. Period two results also indicate that M1A does not necessarily provide a "purer" transactions aggregate. M1A shows significant substitution with several savings-type assets. Thus, a move from M1 to M1A as a guide to monetary policy will not eliminate portfolio redistribution effects. The broader M2 aggregate internalizes the major asset shifts that exist across M1 and net-M2, and hence should provide a more stable aggregate for use as a policy guide. Continued attention on M1 as the guide to policy will require close consideration of the impacts of interest rate movements upon that aggregate.

From the supplier: A number of important monetary and financial changes occurred in the 1980s. A rising question among monetary economists is whether the character of M1 has changed substantially as a result. In particular, a frequent contention is that interest-bearing checkable deposits behave as a savings-type asset, thus subjecting M1 to portfolio redistribution effects in the modern era. This research examines the elasticities of substitution for a variety of financial assets pre- and post-1980. Results indicate that M1 subcomponents do show significant substitution with savings-type assets. However, the portfolio redistribution impacts are not confined to the interest-bearing checkable deposits. Further, results indicate that this behavior is not unique to the 1980s. (Printed by permission of the publisher.)

Citation Details
Title: Portfolio redistribution impacts within the narrow monetary aggregate.
Author: Jean Gauger
Publication: Journal of Money, Credit & Banking (Refereed)
Date: May 1, 1992
Publisher: Ohio State University Press
Volume: v24 Issue: n2 Page: p239(19)

Distributed by Thomson Gale

Price is accurate as of the date/time indicated. Prices and product availability are subject to change. Any price displayed on the Amazon website at the time of purchase will govern the sale of this product.