Are "risky assets" substitutes for "monetary assets"?

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External organisations

  • University of California System


The paper uses an asymptotically ideal model to estimate substitution elasticities between financial assets held by the U.K. personal sector. An important innovation is to extend the range of assets to include "risky" assets as well as capital certain "monetary" assets. The most significant result is the evidence of substitution between "risky" assets and "cash" assets. Also, as risk aversion increases substitution between "risky" assets and "cash" assets generally falls.


Original languageEnglish
Pages (from-to)510-526
Number of pages17
JournalEconomic Inquiry
Issue number3
Publication statusPublished - 1 Jan 1999