Measuring the Nearness of Modern Near-Monies: Evidence from the 1980's

Empirical studies of substitutability among monetary assets generally ignore financial instruments that only recently have become prominent. We remedy this deficiency by investigating substitution behavior within a portfolio of near-monies, including money market accounts and interest-bearing checkable deposits, as well as conventional checking, savings, and time deposits, using a technique of production economics that recently has been applied to the issue of monetary asset substitution. Our findings reveal significant substitutability between the "modern" money market account asset and narrow money. Results also indicate that interest-bearing checkable deposits substitute more readily with savings-type assts than with conventional transaction deposits.