Consumption Loan Augmented Divisia Monetary Index and China Monetary Aggregation

William Barnett, Kun He and Jingtong He
Additional contact information
Kun He: Department of Economics, University of Kansas, Lawrence, KS 66045, USA
Jingtong He: Institute of Economics, Nankai University, Tianjin 300071, China

JRFM, 2022, vol. 15, issue 10, 1-17

Abstract: Simple sum monetary aggregates are based on accounting conventions and have no aggregation theoretic foundations in economic theory. In contrast, Divisia monetary aggregates are directly derived from aggregation and index number theory. Credit card services cannot be included in simple sum monetary aggregates since accounting conventions cannot aggregate over assets and liabilities. However, microeconomic aggregation theory aggregates over service flows, not stocks, regardless of whether from assets or liabilities. As a result, it has recently been shown that Divisia monetary aggregates can be augmented to include credit card services and are available from the Center for Financial Stability in New York City. Other sources of consumer credit cannot be included in Divisia monetary aggregates for the United States since other sources of consumer credit in the United States are linked to specific groups of consumer goods and hence, violate the weak separability condition for the existence of an aggregator function. However, China produces a unique opportunity to broaden the Divisia monetary aggregates since sources of consumer credit, not limited to credit cards, are applicable to all consumption purchases and hence, do not violate the existence condition for an aggregator function. We report initial results with a broader Chinese Divisia monetary aggregate, including not only credit card services but also other broadly acceptable consumer loan services.

Keywords: Divisia monetary aggregates; consumption loans; Chinese monetary aggregates (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/1911-8074/15/10/447/pdf (application/pdf)
https://www.mdpi.com/1911-8074/15/10/447/ (text/html)

Related works:
Working Paper: Consumption Loan Augmented Divisia Monetary Index and China Monetary Aggregation (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:15:y:2022:i:10:p:447-:d:931863

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().