Money, Output and Prices: Evidence from A New Monetary Aggregate

Julio Rotemberg (), John Driscoll () and James Poterba ()

No 3824, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a new utility-based monetary aggregate which we label the currency equivalent aggregate. This aggregate equals the stock of currency that would be required for households to obtain the same liquidity services that they get from their entire collection of monetary assets. We compare the ability of the new aggregate and conventional aggregates, such as Ml and M2, and other indicators of monetary policy to forecast real activity. The CE aggregate has more predictive power for output and prices than standard aggregates, and the time path of the estimated output response is more consistent with broad classes of theoretical models.

JEL-codes: E51 E52 (search for similar items in EconPapers)
Date: 1996-03
Note: ME
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Related works:
Working Paper: Money, Output, and Prices: Evidence from a New Monetary Aggregate (1991)
Journal Article: Money, Output, and Prices: Evidence from a New Monetary Aggregate (1995)
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