Friedman and Divisia Monetary Measures

William Barnett

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the relationship between Milton Friedman’s work and the work on Divisia monetary aggregation, originated by William A. Barnett. The paradoxes associated with Milton Friedman’s work are largely resolved by replacing the official simple-sum monetary aggregates with monetary aggregates consistent with economic index number theory, such as Divisia monetary aggregates. Demand function stability becomes no more of a problem for money than for any other good or service. Money becomes relevant to monetary policy in all macroeconomic traditions, including New Keynesian economics, real business cycle theory, and monetarist economomics. Research and data on Divisia monetary aggregates are available for over 40 countries throughout the world from the online library within the Center for Financial Stability’s (CFS) program, Advances in Monetary and Financial Measurement. This paper supports adopting the standards of monetary data competency advocated by the CFS and the International Monetary Fund (2008, pp. 183-184).

Keywords: Divisia monetary aggregates; demand for money; monetarism; index number theory (search for similar items in EconPapers)
JEL-codes: E4 E41 E44 E5 E51 E52 E58 Y1 (search for similar items in EconPapers)
Date: 2013-12-16
New Economics Papers: this item is included in nep-mac and nep-mon
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Working Paper: Friedman and Divisia Monetary Measures (2013)
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