An extension of currency substitution into the near monies framework: a case for Canada
This paper attempts to estimate the nearness of near monies in Canada including foreign monetary assets, i.e. US dollars. The results enable us to make a statement about how substitutable US dollars are in the Canadian private asset portfolio. This brought the event of currency substitution into the near money framework and we found US dollars are far from good substitutes for Canadian narrowly defined money. Our analysis further provides a reconciliation of results obtained by Miles (1978), Bordo and Choudhri (1982), Husted (1984) and Ghosh (1989).