Divisia Second Moments: An Application of Stochastic Index Number Theory

William Barnett (), Barry Edward Jones () and Travis Dean Nesmith ()

MPRA Paper from University Library of Munich, Germany

Abstract: W. A. Barnett originated the Divisia monetary aggregates, using Diewert's results on superlative index numbers and Barnett's derivation of the user cost of monetary asset services. The resulting Divisia index can be interpreted as a first moment aggregating over growth rates with expenditure shares serving as probabilities. But Theil showed that there are analogous higher order Divisia moments providing distributional information. In this paper we use the Divisia second moments to investigate distributional information in the monetary aggregate growth rates and to measure aggregation error in the Divisia first moments.

Keywords: Divisia monetary aggregates; Divisia second moments; monetary aggregation; monetary policy; distribution effects (search for similar items in EconPapers)
JEL-codes: E51 E52 E01 E4 G0 E41 C1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2008-06-12
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Downloads: (external link)
http://mpra.ub.uni-muenchen.de/9111/ orginal version
http://mpra.ub.uni-muenchen.de/9124/ revised version

Related works:
Working Paper: Divisia Second Moments: An Application of Stochastic Index Number Theory (2008)
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