Redefining the Monetary Agggregates: A Clean Sweep

Barry Cynamon, Donald Dutkowsky () and Barry Edward Jones ()
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Barry Cynamon: University of Chicago
Donald Dutkowsky: Syracuse University

Eastern Economic Journal, 2006, vol. 32, issue 4, pages 661-672

Abstract: This paper focuses on the role of sweep programs in properly measuring money. We propose new monetary aggregates that adjust the conventional measures to account for the medium of exchange capability of funds in sweep programs. Using data on swept funds in retail and commercial demand deposit (DD) sweep programs, we provide time series of monthly data on the sweep-adjusted money measures. By the twenty-first century, DD sweeps have led to distortion in reported MZM of approximately 3 percent, 5 percent for M2, and 6 percent for M2M. Underreporting of M1 due to retail and DD sweep programs is almost 70 percent.

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