Premium
THE COMPOSITION AND CONSTRUCTION OF MONETARY AGGREGATES
Author(s) -
SWOFFORD JAMES L.,
WHITNEY GERALD A.
Publication year - 1991
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1991.tb00859.x
Subject(s) - divisia index , divisia monetary aggregates index , economics , aggregate (composite) , inflation (cosmology) , monetary economics , monetary policy , simple (philosophy) , econometrics , construct (python library) , index (typography) , microeconomics , inflation targeting , credit channel , mathematics , computer science , statistics , philosophy , materials science , physics , epistemology , theoretical physics , energy (signal processing) , energy intensity , composite material , world wide web , programming language
An economic monetary aggregate is composed from a set of monetary goods that are at least weakly separable from other goods in the optimizing agent's utility function. We construct such an aggregate using a Divisia index number. We demonstrate that through the middle of the 1980s forecasts of the inflation rate based on our economic monetary aggregate are superior to forecasts based on the simple sum monetary aggregates M1 or M2.