CURRENCY - EQUIVALENT VS. DIVISIA MONETARY AGGREGATES: THEORETICAL EVALUATION AND EMPIRICAL EVIDENCE FROM THE UNITED STATES AND CHINA

Xian Huang () and Shilong Xia ()
Additional contact information
Xian Huang: Department of Finance at Economics and Management School of Wuhan University and Financial Department and Policy Research Center of Wuhan University.
Shilong Xia: Department of Finance at Economics and Management School of Wuhan University.

Journal for Economic Forecasting, 2015, issue 3, 60-80

Abstract: The paper derives and compares the theoretical models of currency-equivalent and Divisia monetary aggregates in a new way. We show that currency-equivalent monetary aggregates are superior to Divisia monetary aggregates. Moreover, we compare the stability of demand functions of different monetary aggregates in the United States and China, through Pesaran (1998, 2001)’s methods of “bounds testing for level relationships” and “ARDL approach to cointegration”. We show that in both countries the demand functions of currency-equivalent monetary aggregates are more stable than those of Divisia and simple-sum monetary aggregates. Moreover, currency-equivalent monetary aggregates are more controllable than Divisia and simple-sum monetary aggregates in both countries.

Keywords: Currency-equivalent; Divisia; monetary aggregates (search for similar items in EconPapers)
JEL-codes: E41 E52 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ipe.ro/rjef/rjef3_15/rjef3_2015p60-80.pdf

Related works:
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:rjr:romjef:v::y:2015:i:3:p:60-80

Access Statistics for this article

Journal for Economic Forecasting is currently edited by Lucian Liviu Albu and Corina Saman

More articles in Journal for Economic Forecasting from Institute for Economic Forecasting Contact information at EDIRC.
Bibliographic data for series maintained by Corina Saman ( this e-mail address is bad, please contact ).