Structural Change in the Euro-Dollar Market: Evidence From a Two-Equation Model
- 1 January 1973
- journal article
- Published by Board of Governors of the Federal Reserve System in International Finance Discussion Papers
- Vol. 1973.0 (33) , 1-19
- https://doi.org/10.17016/ifdp.1973.33
Abstract
This paper describes a two-equation supply-and-demand model for 3-month Euro-dollar deposits, and discusses the results of estimating a reduced-form equation for the determination of the interest rate on such deposits. The objectibe is to emphasize the differences between the estimation results for the period 1966-68 and those for 1969-70. Multicollinearity among the explanatory variables complicates the interpretation of the estimates, and thus there is also a discussion of the tests developed by Farrar and Glauber for determining the degree and location of multicollinearity.Keywords
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