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International Advances in Monetary and Financial Measurement:

This page contains two sections: (1) a section to showcase Aggregation-Theoretic Monetary Data from International Central Banks, and (2) a research section to display Studies Using or Producing International Divisia Monetary Aggregates.

Aggregation-Theoretic Monetary Data from International Central Banks

Divisia monetary aggregates have been produced for a very large number of countries throughout the world. Most of those data are available only internally within central banks. Far fewer central banks are making the data public. At present, we are aware of the following seven central banks maintaining Divisia monetary aggregates. In the case of the European Central Bank, the data are for all of the countries within the European Monetary Union. In the case of the Federal Reserve Bank of St. Louis, the Divisia monetary aggregates data are called Monetary Services Indexes. All aggregation-theoretic monetary aggregates in these studies and databases are built upon the theoretical foundations derived and applied for the United States by Barnett (1980), including those foundations using the Fisher ideal index instead of the Divisia index. See the AMFM Library for papers that are cited within this section's discussions, but are not themselves contained within this section.

Country Links to Banks Links to Divisia Data
European Monetary Union European Central Bank None expected from the ECB, since available internally only to the ECB's Governing Council, but available from the Bruegel think tank in Belgium.
Israel Bank of Israel Divisia data
Japan Bank of Japan None expected, since available only to executives of the Bank of Japan
Poland National Bank of Poland Divisia data
United Kingdom Bank of England Divisia data (See Table A6.1)
United Nations International Monetary Fund Divisia data (See pp. 183-184)
United States St. Louis Fed Divisia Data (called Monetary Services Index or MSI at that bank)



Studies Using or Producing International Divisia Monetary Aggregates

These papers are limited to those using or producing Divisia monetary aggregates data and do not include many of the most important theoretical and fundamental research contributions, which can be found in the Library.

Interactive Search   If you like, you can filter the studies shown below by a keyword, author, and/or country.

Keyword: Author: Country:
Australia
2000 Weighted Monetary Aggregates: Empirical Evidence for Australia
G. C. Lim and Vance L. Martin
This paper appeared in the book, Belongia and Binner (2000), pp. 249-262.
1985 A Divisia System Approach to Modeling Monetary Aggregates
T. V. Hoa
This paper appeared in Economics Letters, vol. 17, pp. 365-368.
Austria
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper, using pre-euro data, is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
1985 Monetary Aggregates, Their Information Content and Their Aggregation Error: Some Preliminary Findings for Austria, 1965-1980
M. J. Driscoll, J. L. Ford, A. W. Mullineux, and W. Kohler
This paper about pre-euro Austria appeared in Empirical Economics, vol. 10, pp. 13-25.
Bahrain
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
Barbados
1989 Money: Its Measure and its Influence on the Economy of Barbados
Kurt Lambert
This research is a Master's thesis at the University of Texas at Austin.
Belgium
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper using pre-euro data is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
Brazil
2002 Indicadores Derivados de Agregados Monetários
F. A. F. Neto and J. Albuquerque
This central bank working paper is in Trabalhos para Discussão 47, Banco Central do Brasil, Setembro.
2000 Weighted Monetary Aggregation: an Analysis of Causality
J. A. Devino
This paper appeared in "Economia Aplicada," São Paulo, vol. 4, pp. 723-742.
1997 An Analysis of the Money Demand Using Divisia Monetary Aggregates and Box-Cox Transformation
J. A. Devino
This paper appeared in Revista Nova Economia, Belo Horizonte, FACE/UFMG, December, pp. 181-246.
Bulgaria
1997 Money Aggregates in a Transition Economy: the Case of Bulgaria, 1991-1995
Georgy Ganev
This research is a Ph.D. thesis at Washington University in St. Louis.
Canada
2000 The Canadian Experience with Weighted Monetary Aggregates
David Longworth and Joseph Atta-Mensah
This paper appeared in the book, Belongia and Binner (2000), pp. 265-291.
2000 Monetary Aggregation and Monetary Policy
A. Serletis and T. E. Molik
This paper appeared in Money, Monetary Policy and Transmission Mechanisms, Bank of Canada, pp. 103-135.
1998 The Demand for Money in an Open Economy: Some Evidence for Canada
C. J. Hueng
This paper appeared in the North American Journal of Economics and Finance, vol. 9, pp. 15-31.
1994 The Canadian Experience with Weighted Monetary Aggregates
David Longworth and Joseph Atta-Mensah
This paper is a Bank of Canada Working Paper.
1981 A Comparison of Alternative Methods for Monetary Aggregation: Some Preliminary Evidence
J. Cockerline and J. Murray
This paper is Technical Report #28, Bank of Canada, Ottawa, Canada.
1978 Modeling the Demand for Liquid Assets: An Application to Canada
Donal J. Donovan
This is IMF Staff Paper #25, pp. 676-704.
Chile
1990 Divisia Monetary Aggregates: Could They Have Made a Difference in Chilean Monetary Policy, 1970-1987?
Katerina Taiganides
This research is a Master's thesis at the University of Texas at Austin.
China
2016 Chinese Divisia Monetary Index and GDP Nowcasting
William A. Barnett and Biyan Tang
Abstract Since China's enactment of the Reform and Opening-Up policy in 1978, China has become one of the world's fastest growing economies, with an annual GDP growth rate exceeding 10% between 1978 and 2008. But in 2015, Chinese GDP grew at 7%, the lowest rate in 5 years. Many corporations complain that the borrowing cost of capital is too high. This paper constructs Chinese Divisia monetary aggregates M1 and M2, and, for the first time, constructs the broader Chinese monetary aggregates, M3 and M4. Those broader aggregates have never before been constructed for China, either as simple-sum or Divisia. The results shed light on the current Chinese monetary situation and the increased borrowing cost of money. GDP data are published only quarterly and with a substantial lag, while many monetary and financial decisions are made at a higher frequency. GDP nowcasting can evaluate the current month's GDP growth rate, given the available economic data up to the point at which the nowcasting is conducted. Therefore, nowcasting GDP has become an increasingly important task for central banks. This paper nowcasts Chinese monthly GDP growth rate using a dynamic factor model, incorporating as indicators the Divisia monetary aggregate indexes, Divisia M1 and M2 along with additional information from a large panel of other relevant time series data. The results show that Divisia monetary aggregates contain more indicator information than the simple sum aggregates, and thereby help the factor model produce the best available nowcasting results. In addition, our results demonstrate that China's economy experienced a regime switch or structure break in 2012, which a Chow test confirmed the regime switch. Before and after the regime switch, the factor models performed differently. We conclude that different nowcasting models should be used during the two regimes.
2007 Divisia Monetary Indexes of Aggregate Money: Measurement Method and Case Study
Guo Hong-Xia
This research is based on the author's Master's thesis at Hunan University in 2007.
2000 Monetary Services and Money Demand in China
Q. Yu and A. K. Tsui
This paper appeared in the China Economic Review, vol. 11, pp. 134-148.
Denmark
2006 The Problem of Measuring Money: Results from an Analysis of Divisia Monetary Aggregates for Denmark
Lisbeth la Cour
This paper appeared in the book, Belongia and Binner (2006), pp. 185-210.
European Monetary Union
2022 Euro area monetary asset demand and Divisia aggregates
Adrian R. Fleissig, Barry E. Jones Zsolt Darvas
Monetary asset user costs are functions of spreads between a benchmark rate of return and the own rates of return on the monetary assets. We analyze the impact of the benchmark rate on a Euro area Divisia M2 aggregate, on estimated elasticities of substitution, and on estimated impulse response functions. Substitution in response to changes in the user cost of M1 is generally elastic, but we find evidence of inelastic substitution along other dimensions. When a loan rate is used as the benchmark, substitution in response to changes in the user costs of the two components of M2-M1 is inelastic throughout the sample and the corresponding elasticity estimates are near their lowest levels during the pandemic. This is strong evidence that Divisia monetary aggregates are preferable to conventional monetary aggregates. Annual growth rates of simple sum and Divisia M2 monetary aggregates differ significantly in some periods, but not during the pandemic. Estimated impulse response functions using both Divisia and simple sum money measures indicate that money shocks have positive and statistically significant effects on real output. The response of the price level to a money shock tends to be more persistent when the models are estimated using Divisia aggregates.
2021 Multilateral Divisia Monetary Aggregates for the Euro Area
William A Barnett and Neepa Gaekwad
In light of the "two-pillar strategy" of the European Central Bank, good measures of aggregated moneyacross countries in the Euro area are policy relevant. The objective of this paper is to focus on the multilateral Divisia monetary aggregates for the Euro area to produce a theoretically consistent measure of monetary services for the Euro area monetary union. Based on theory developed in Barnett (2007), the multilateral Divisia monetary aggregates for 17 Euro area countries are found to provide a better signal of recession, when compared to the corresponding simple sum monetary aggregates.
2020 Strengthening the Second Pillar: A Greater Role for Money in Achieving the ECB's Nominal Objectives
Michael T. Belongia and Peter N. Ireland
Like most central banks, the European Central Bank makes and implements its monetary policy decisions by adjusting its targets for short-term interest rates in response to information gleaned from a wide range of macroeconomic indicators and projections. Unlike many other central banks, however, the ECB also monitors money growth as a "cross check" against the macroeconomic analysis that guides its policies of interest rate management. This paper argues that making further use of this "second pillar" would help the ECB to better achieve its nominal objectives in the present environment of exceptionally low inflation. By modifying the "P-star" framework — a small-scale model with Quantity Theory foundations — the paper shows how the ECB could use its influence over Divisia money growth to stabilize nominal spending around a target path, even while its traditional interest rate policies are constrained by the zero lower bound.
2019 Divisia Monetary Aggregates for a Heterogeneous Euro Area
Maximilian Brill, Dieter Nautz, and Lea Sieckman
We introduce a Divisia monetary aggregate for the euro area that accounts for the heterogeneity across member countries both, in terms of interest rates and the decomposition of monetary assets. In most of the euro area countries, the difference between the growth rates of the country-speci?c Divisia aggregate and its simple sum counterpart is particularly pronounced before recessions. The results obtained from a panel probit model con?rm that the divergence between the Divisia and the simple sum aggregate has a signi?cant predictive content for recessions in euro area countries.
2019 Money Neutrality, Monetary Aggregates and Machine Learning
Periklis Gogas, Theophilos Papadimitriou and Emmanouil Sofianos
The issue of whether or not money affects real economic activity (money neutrality) has attracted significant empirical attention over the last five decades. If money is neutral even in the short-run, then monetary policy is ineffective and its role limited. If money matters, it will be able to forecast real economic activity. In this study, we test the traditional simple sum monetary aggregates that are commonly used by central banks all over the world and also the theoretically correct Divisia monetary aggregates proposed by the Barnett Critique (Chrystal and MacDonald, 1994; Belongia and Ireland, 2014), both in three levels of aggregation: M1, M2, and M3. We use them to directionally forecast the Eurocoin index: A monthly index that measures the growth rate of the euro area GDP. The data span from January 2001 to June 2018. The forecasting methodology we employ is support vector machines (SVM) from the area of machine learning. The empirical results show that: (a) The Divisia monetary aggregates outperform the simple sum ones and (b) both monetary aggregates can directionally forecast the Eurocoin index reaching the highest accuracy of 82.05% providing evidence against money neutrality even in the short term.
2014 Does Money Matter in the Euro Area? Evidence from a New Divisia Index
Zsolt Darvas
The author has created a euro-area Divisia-money dataset and estimate theoretically correct responses to money, user cost and interest rate shocks using structural vector-autoregressions. His findings suggest that money matters for output, prices and interest rates, while the European Central Bank can influence monetary developments.

Since no Divisia monetary aggregates are available for the euro area, the author has first created and made available a database on euro-area Divisia monetary aggregates. Plans are in place to update the dataset in the future and keep it publicly available.
2009 Comparison of Simple Sum and Divisia Monetary Aggregates Using Panel Data Analysis
S. Celik and S. Uzun
This paper appeared in the International Journal of Social Sciences and Humanity Studies, vol. 1, pp. 1-13.
2009 Admissable Monetary Aggregates for the Euro Area
J. M. Binner, R. K. Bissoondeeal, C. T. Elger, B. E. Jones, and A. W. Mullineux
This paper appeared in the Journal of International Money and Finance, vol. 28, pp. 99-114.
2008 Evaluating the Performance of a EuroDivisia Index Using Artificial Intelligence Techniques.
J. M. Binner, A. M. Gazely, and G. Kendall
A revised version of this paper appeared in International Journal of Automation and Computing, vol. 5, pp. 58-62.
2005 A Comparison of Linear Forecasting Models and Neural Networks; An Application to Euroinflation and EuroDivisia
J. M. Binner, R. Bissoondeeal, T. Elger, A. M. Gazely, and A. W. Mullineux
A revised version of this paper appeared in Applied Economics, vol. 37, pp. 665-680.
2003 Aggregation-Theoretic Monetary Aggregation over the Euro Area, When Countries Are Heterogeneous
W. A. Barnett
This paper is European Central Bank Working Paper No. 260, available on the ECB's web site. A shorter form appeared as Barnett (2007) in the Journal of Econometrics. For the reference to that published paper, see the Important Papers Highly Relevant to AMFM Section of the AMFM library.
2002 Analysing Divisia Aggregates for the Euro Area
H. E. Reimers
This paper, using pre-euro data, is Discussion Paper 13/02, Economic Research Centre of the Deutsche Bundesbank, Frankfurt.
2001 Does Liquidity Matter: Properties of a Synthetic Divisia Monetary Aggregate in the Euro Area
L. Stracca
The paper is European Central Bank Working Paper no. 79, Frankfurt.
2001 Constructing Historical Euro-Zone Data
A. Beyer, J. A. Doornick, and D. F. Hendry
This paper appeared in the Economic Journal, vol. 111, pp. 308-327.
2000 Divisia Aggregates and the Demand for Money in Core EMU
M. M. G. Fase
This paper appeared in the book, Belongia and Binner (2000), pp. 138-172.
1997 Monetary Integration and Currency Substitution in the EMS: The Case of a European Monetary Aggregate
P. Spencer
This article appeared in the European Economic Review, vol. 41, pp. 1403-1419.
1997 The Demand for Divisia Money in a Core Monetary Union
K. Wesche
This paper appeared in the Federal Reserve Bank of St. Louis Review, vol. 7, pp. 51-60.
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper, using pre-euro data, is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
1994 Money Demand within the EMU: an Analysis with the Divisia Measure
M. M. G. Fase and C. C. A. Winder
This paper appeared in De Nederlandsche BankNV, Amsterdam, pp. 25-55.
Finland
2002 Analysing Divisia Aggregates for the Euro Area
H. E. Reimers
This paper, using pre-euro data, is Discussion Paper 13/02, Economic Research Centre of the Deutsche Bundesbank, Frankfurt.
France
2002 Analysing Divisia Aggregates for the Euro Area
H. E. Reimers
This paper, using pre-euro data, is Discussion Paper 13/02, Economic Research Centre of the Deutsche Bundesbank, Frankfurt.
1996 Divisia Monetary Aggregates: A Survey in the Case of France
S. Lecarpentier
This paper about pre-euro France appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper, using pre-euro data, is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
GCC (Gulf States) Area
2014 Modern and Traditional Methods of Measuring Money Supply: the Case of Saudi Arabia
Ryadh M. Alkhareif and William A. Barnett
Saudi Arabian Monetary Authority (SAMA) Working Paper #1 was released in December 2014.
2013 Advances in Monetary Policy Design: Applications to the Gulf Monetary Union
Ryadh M. Alkhareif and William A. Barnett
This book, published by Cambridge Scholars Publishing, is the first to publish Divisia-based money supply indexes and core inflation indicators for the GCC.
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
In William A. Barnett and Fredj Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press, 2012, pp. 1 - 37.
Germany
2015 The Information Content of Monetary Statistics for the Great Recession: Evidence from Germany
Wenjuan Chen and Dieter Nautz
This paper introduces a Divisia monetary aggregate for Germany and explores its information content for the Great Recession. This paper appeared in SFB 649 Economics Risk Berlin, Humboldt Universitat Zu Berlin, Germany.
2006 Estimating a Regular Continuous-Time System of Demand for World Monies with Divisia Data
K. P. Donaghy and D. M. Richard
This paper appeared in the book, Belongia and Binner (2006), pp. 76-103.
2002 Analysing Divisia Aggregates for the Euro Area
H. E. Reimers
This paper, using pre-euro data, is Discussion Paper 13/02, Economic Research Centre of the Deutsche Bundesbank, Frankfurt.
2000 Consequences of Money Stock Mismeasurement: Evidence from Three Countries
Michael T. Belongia
This paper about pre-euro Germany appeared in Belongia and Binner (2000), pp. 292-312.
2000 Neural Networks with Divisia Money: Better Forecasts of Future Inflation
Robert E. Dorsey
This paper about pre-euro Germany appeared in Belongia and Binner (2000), pp. 28-46.
2000 Weighted Dutch and German Monetary Aggregates: How Do They Perform as Monetary Indicators for the Netherlands?
Norbert G. J. Janssen and Clemens J. M. Kool
This paper about pre-euro Germany appeared in Belongia and Binner (2000), pp. 120-137.
2000 Weighted Monetary Aggregates for Germany
Heinz Herrman, Hans-Eggert Reimers, and Karl-Heinz Toedter
This paper about pre-euro Germany appeared in Belongia and Binner (2000), pp. 79-101.
1996 Divisia in Germany
W. Gaab
This paper about pre-euro Germany appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper, using pre-euro data, is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
Hungary
1997 Divisia Indices and Estimated Money Demand Functions for Hungary
Zsoldos István
This working paper is from the Central Bank of Hungary and is written in Hungarian.
India
2015 An SVAR Approach to Evaluation of Monetary Policy in India: Solution to the Exchange Rate Puzzles in an Open Economy
William Barnett, Soumya Bhadbury and Taniya Ghosh
This paper appeared in the journal, Open Economies Review.
2010 The Divisia Monetary Indices as Leading Indicators of Inflation
M. Ramachandran, Rajib Das, and Binod B. Bhoi
This paper is Reserve Bank of India Development Research Group Study No. 36, Mumbai
2001 Simple Sum vs. Divisia Monetary Aggregates: An Empirical Evaluation
D. Acharya and B. Kamaiah
This paper appeared in the Economic and Political Weekly, vol. 36, pp. 317-326.
1999 Will the Right Monetary Aggregate for India Please Stand Up?
R. Jha and I. S. Longjam
This paper appeared in the Economic and Political Weekly, vol. 34, pp. 631-630.
1995 Fiscal and Monetary Actions: A Test of Relative Importance of the Economic Monetary Aggregates and their Simple Sum Counterparts
M. Ramachanran
This paper appeared in Prajnan, vol. 24, pp. 125-137.
1991 Simple Sum vs. Superlative Monetary Aggregates for India
Ganti Subrahmanyam and S. B. Swami
This paper appeared in the Journal of Quantitative Economics, vol. 17, pp. 79-92.
1989 Weighted Monetary Aggregates: Rationale and Relevance for India
N. Jadhav
This paper is Reserve Bank of India Occasional Papers, 10, pp. 39-56.
1989 Weighted Monetary Aggregates for India: 1970-1986.
R. Kannan
This paper appeared in Prajnan, vol. 18, pp. 453-460.
Indonesia
2017 Financial Liberalization and Divisia Money Demand in Indonesia
Sianturi, Ronald Hasudungan; Tanjung, Ahmad Feri1; Leong, Choi-Meng; Puah, Chin-Hong; Brahmana, Rayenda Khresna
Money demand function that turns out to be unstable due to the financial liberalization has affected the effectiveness of monetary policy that utilizes monetary targeting as policy target. Thus, Divisia monetary aggregate that is consistent with the economic theory has been used to examine the money demand function in Indonesia. Monetization is also included as a determinant of money demand to measure the financial deepening. A stable M2 money demand has been identified via the use of Divisia M2 money and the inclusion of monetization variable. Monetary targeting can serve as alternative policy target for Indonesia and there is a possibility for a return to monetary targeting in Indonesia.
2010 Financial Liberalization and Money Demand in Indonesia: Implications for Weighted Monetary Aggregates
Hiew Lee Chea
This study investigates Indonesia monetary regime changes and the significance of Divisia monetary aggregates in formulating the monetary policy in Indonesia from the period of 1981Q1 to 2005Q4.
2010 Financial Liberalization, Weighted Monetary Aggregates, and Money Demand in Indonesia
Puah Chin-Hong and Heiw Lee-Chea
This paper appeared in the Labuan Bulletin of International Business & Finance, vol. 8, December, pp. 76-93.
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M.S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Iran
2007 The Role of Definition of Money in the Stability of the Iranian Demand for Money
P. Davoudi and Z. Zarepour
This paper appeared in Iranian Economic Research, vol. 29, pp. 47-74.
Israel
2016 Money and monetary policy in Israel during the last decade
Jonathan Benchimol
This study examines how money and monetary policy have influenced output and inflation during the past decade in Israel by comparing two New Keynesian DSGE models. One is a baseline separable model (Galí, 2008) and the other assumes non-separable household preferences between consumption and money (Benchimol and Fourçans, 2012). We test both models by using rolling window Bayesian estimations over the last decade (2001-2013). The results of the presented dynamic analysis show that the sensitivity of output with respect to money shocks increased during the Dot-com, Intifada, and Subprime crises. The role of monetary policy increased during these crises, especially with regard to inflation, even though the effectiveness of conventional monetary policy decreased during the Subprime crisis. In addition, the non-separable model including money provides lower forecast errors than the baseline separable model without money, while the influence of money on output fluctuations can be seen as a good predictive indicator of bank and debt risks. By impacting and monitoring households’ money holdings, policy makers could improve their forecasts and crisis management through models considering monetary aggregates.

The link provided is for the original working paper version. The paper was later published in the Journal of Policy Modeling, volume 38, 2016, pp. 103-024.
2013 Divisia Monetary Aggregates for Israel: Background Note and Metadata
Edward (Akiva) Offenbacher and Maayan Kellerman
This Bank of Israel working paper provides background information relevant to the Bank of Israel Divisia monetary aggregates.
2011 Send requests for information about the Israeli Divisia monetary aggregates data to the Bank of Israel Information and Statistics Department or to Edward Akiva Offenbacher
Bank of Israel Information & Statistics Department
Email: statistics@boi.org.il or edward.offenbacher@boi.org.il
2011 Divisia Monetary Aggregates for Israel: Background Note and Metadata
Edward (Akiva) Offenbacher and Shachar Shemesh
This Bank of Israel working paper provides background information relevant to the Bank of Israel Divisia monetary aggregates.
Italy
1999 A Neural Network Approach to Inflation Forecasting: the Case of Italy
J. M. Binner and A. M. Gazely
This paper on pre-euro Italy appeared in Global Business and Economics Review, vol. 1, pp. 76-92.
1996 Measuring Money with a Divisia Index: An Application to Italy
E. Gaiotti
This paper about pre-euro Italy appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
Japan
2009 Comparison of Simple Sum and Divisia Monetary Aggregates Using Panel Data Analysis
S. Celik and S. Uzun
This paper appeared in the International Journal of Social Sciences and Humanity Studies, vol. 1, pp. 1-13.
2006 Estimating a Regular Continuous-Time System of Demand for World Monies with Divisia Data
K. P. Donaghy and D. M. Richard
This paper appeared in the book, Belongia and Binner (2006), pp. 76-103.
2000 Consequences of Money Stock Mismeasurement: Evidence from Three Countries
Michael T. Belongia
This paper appeared in the book, Belongia and Binner (2000), pp. 292-312.
2000 Broad and Narrow Divisia Monetary Aggregates for Japan
Kazuhiko Ishida and Koji Nakamura
This paper appeared in the book, Belongia and Binner (2000), pp. 173-199.
1996 Financial Deregulation and Divisia Monetary Aggregates in Japan
K. Hirayama and M. Kasuya
This paper appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1984 Divisia Monetary Aggregates and the Demand for Money: A Japanese Case
Kazuhiko Ishida
This paper appeared in the Bank of Japan Monetary and Economic Studies, vol. 2, pp. 49-80.
Kenya
2018 The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
Shehu El-Rasheed
The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations.
Kuwait
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
Malawi
2018 The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
Shehu El-Rasheed
The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations.
Malaysia
2018 Revisiting Money Demand in Malaysia: Simple-Sum versus Divisia Monetary Aggregates
Chin-Hong Puah, Choi-Meng Leong, Abu Mansor Shazali and Evan Lau
BNM has discarded the use of monetary targeting due to the speeding up of financial reforms as the relationship between money and important macroeconomic indicators in Malaysia has weakened. However, the implementation of the interest rate targeting requires the authorities to alter the policy rate recurrently. Alternatively, the authorities may consider monetary targeting, which provides the ease of control of monetary aggregates, provided that a stable demand for money function can be derived. Nevertheless, financial liberalization has greatly affected the stability of money demand. Thus, this study estimated the demand for money function in Malaysia by considering the effect of the financial development in which a Divisia monetary aggregate has been constructed as an alternative measure of money and a monetization variable has been included in the function. The Johansen and Juselius cointegration test and error correction model are utilized to estimate the demand for money function. The empirical findings indicate that a plausible demand for money function is derived using Divisia M2. Furthermore, monetization appears as an important variable that contributes to a stable money demand. The presence of a stable Divisia M2 money demand has reassured the usefulness of monetary aggregate as the indicator for monetary policy purposes. Monetary targeting provides alternative policy target choice for the conduct of monetary policy. Divisia monetary aggregates can also serve as the alternative money measurement apart from the conventional money supply.
2016 Symmetric and Asymmetric Approaches in Estimating the Money Demand Function for Malaysia: A Comparison between Simple Sum and Divisia Indexes
Amirul Afiq Kamaruddin and Norlin Khalid
This study aims to estimate the money demand function by using simple sum monetary aggregates M1 and M2 monetary aggregate with weighted monetary aggregate Divisia DM1 and DM2. Both Divisia monetary aggregate for narrow money DM1 and Divisia for broad money DM2 are built using following discrete time estimation by Tornquist (1936) and Theil (1967). Divisia index is said to be better than the simple summation index as differences in liquidity levels and the cost of each asset in the monetary aggregates are taking into account by putting a different weight according to the liquidity level. Unlike previous studies, this study estimates the money demand function in asymmetric term by using the Non-Linear Autoregressive Distributed Lag (NARDL). The results proved the existence of a long-term relationship between money demand for both types of monetary aggregates with income levels, interest rates, and the inflation rates. This study also supports the existence of the effect of asymmetry in money demand for Malaysia. The implications of the study show that it is important for policy makers to take into account the effect of the asymmetry in income levels in determining the demand for money and its determinants in Malaysia.
2007 Scale Variable Specification in a Money Demand Function for Malaysia
J. Dahalan, S. C. Sharma, and K. Sylwester
This paper appeared in the Journal of Asian Economics, vol 18 pp. 867-882.
2005 Divisia Monetary Aggregates and Money Demand for Malaysia
J. Dahalan, S. C. Sharma, and K. Sylwester
This paper appeared in the Journal of Asian Economics, vol. 15, pp. 1137-1153.
2002 Determinants and Stability of Demand for M2 in Malaysia
S. S. Sriram
This paper appeared in the Journal of Asian Economics, vol. 13, pp. 337-356.
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing
Mexico
1989 Construction of New Monetary Aggregates: the Case of Mexico
Alfredo M. Sandoval
This research is a Ph.D. thesis at the University of Texas at Austin.
Myanmar
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Nepal
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Netherlands
2000 Weighted Dutch and German Monetary Aggregates: How Do They Perform as Monetary Indicators for the Netherlands?
Norbert G. J. Janssen and Clemens J. M. Kool
This paper about pre-euro Netherlands appeared in the book, Belongia and Binner (2000), pp. 120-137.
1996 Aggregating Money Demand in Europe with a Divisia Index
Katrin Wesche
This paper, using pre-euro data, is University of Bonn Institute für Internationale Wirtschaftspolitik Projektbereich B Discussion Paper No. B-392, November.
1985 Monetary Control, The Dutch Experience: Some Reflections on the Liquidity Ratio
M. M. G. Fase
This paper about pre-euro Netherlands appeared in the book, C. van Ewijk and J. J. Klant (eds.), Monetary Conditions for Economic Recovery, Martinus Nijhoff, Dordrecht, pp. 95-125.
Nigeria
2019 Financial Sector Reforms, Monetary And Output Uncertainties and the Behavior of Money Demand in Kenya: the Divisia Index Approach
Hussin Abdullah and Shehu El-Rasheed
The financial sector reforms implemented by the Central Bank of Kenya (CBK) resulted in rapid financial innovation (such as the popular M-Pesa mobile money services) growth, and expansion of several interest earning financial instruments. These developments affect the definition and composition of monetary aggregates, posing a question on the correctness of the current money measures used by CBK. The simple sum aggregates were identified with several theoretical and empirical shortcomings. The rapid financial sector development might affect the stability of money demand function. This study constructs Divisia monetary aggregates for Kenya over the period of 2000’s first quarter to 2015’s third quarter and applies the ARDL method in investigating the stability of money demand function. For the first time, monetary uncertainty and output uncertainty variables are introduced to the Kenyan money demand model. The results reveal that both monetary and output uncertainty has significant influence on money demand in Kenya. This implies that omitting the two variables in the Kenya money demand function might lead to a wrong specification. The money demand function is stable over the period. It means that monetary aggregates targeting is the right framework for monetary policy formulation by the CBK.
2018 The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
Shehu El-Rasheed
The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations.
2017 Divisia Monetary Aggregates and Demand for Money in Nigeria
Shehu El-Rasheed and Hussin Abdullah
The Nigerian financial system has undergone several transformations over the past few decades leading to financial innovations. These innovations have altered the definition and use of monetary aggregates as a monetary policy tool. The conventional simple sum aggregates were identified with an aggregation bias. The economy has experienced series of monetary and financial problems which requires further investigation into the causes and remedies. This paper construct the Divisia monetary aggregates (DM1 and DM2) for Nigeria using the Barnett 1980 Divisia index. Descriptive statistics were used to compare the simple sum and Divisia monetary aggregates. Using a data for 2000: 1 to 2015: 4 obtained from the International financial statistics (IFS) of the IMF, the study employs the ARDL approach to cointegration and estimated the demand for money function using the newly constructed Divisia aggregates...
Oman
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
Pakistan
2011 Money Demand Function for Pakistan (Divisia Approach)
Haroon Sarwar, Zakir Hussain, and Masood Sarwar Awan
This working paper is online in the Munich Personal RePEc Archive. The paper’s conclusion is that the “State Bank of Pakistan should abandon the simple sum aggregation technique and switch over to the Divisia aggregates, which have more aggregation theoretic foundations.”
2011 A Semi-Nonparametric Approach to the Demand for Money in Pakistan
Haroon Sarwar, Zakir Hussain, and Masood Sarwar
The degree of substitutability of different monetary assets serves as a valuable source of information for Pakistan’s monetary authorities in the context of money demand analysis. Barnett’s (1980) concept of the micro-foundations of money demand has paved the way for a more comprehensive demand system analysis. Locally flexible functional forms are unable to estimate substitution elasticities at all data points, and thus, we use the asymptotically ideal model, which is a semi-nonparametric globally flexible functional form. Our data on income, price, and substitution elasticities show that there is less-than-perfect substitution among monetary assets. The results of Allan and Morishima elasticities show that the former are inherently biased toward showing monetary assets as complements, making Morishima a better choice. The study recommends that it is high time Pakistan’s monetary authorities abandoned the simple-sum aggregation method, which assumes perfect substitution among monetary assets.
1997 The Demand for Simple-Sum and Divisia Monetary Aggregates for Pakistan: A Cointegration Approach
S. M. Tariq and K. Matthews
This paper appeared in the Pakistan Development Review, vol. 3, pp. 275-291.
1988 Substitutability of Pakistan’s Monetary Assets under Alternative Monetary Aggregates
M Aynul Hasan, S. Ghulam Kadir, and S. Fakhre Mahmud
The paper appeared in the journal, The Pakistan Development Review, vol. 27, pp. 317-326.
Peru
1991 Seigniorage, Inflation and Monetary Policy: the Case of Peru, 1985-1989
Veronica Ruiz de Castilla
This research is a Master's thesis at the University of Texas at Austin.
Philippines
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Poland
2003 Monetary Assets Expenditures and Economic Growth
Krysztof Kluza and Stanislaw Kluza
This paper was presented at the 23rd Conference on Monetary Policy, National Bank of Poland, November 27-28, 2003.
2001 Zastosowanie Indeksów Divisia w Polsce
S. Kluza
This research appeared in rozprawa doctorska, Kolegium Analiz Ekonomicznych, Szkola Glówna Handlowa, Warszawa.
1999 Konstrukcja Pieniężnych Agregatów Divisia w Warunkac Polskich
N. Cieśla
This paper appeared in Materialy i Studia nr 89, NBP, Warszawa.
Qatar
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
Russia
2022 Money demand, GDP nowcasting and the price puzzle
Makram El-Shagi, Kiril Tochkov
The lack of developed financial markets and well-functioning transmission channels assigns monetary aggregates in emerging economies the potential role of nominal anchor, intermediate target, or informational variable for monetary policy. The effectiveness of this approach relies crucially on the correct measurement of money, which is not fulfilled by the conventional index based on the simple sum of financial assets. This paper calculates alternative Divisia monetary aggregates for Russia over the period 1998-2019, which account for the level of liquidity of a given monetary asset by assigning weights according to the usefulness of that asset for transaction services. Divisia is found to follow a markedly different growth pattern from the simple sum, whereby deviations between the two series are even more pronounced when foreign currency accounts are included. We conduct three empirical exercises to demonstrate the advantages of Divisia over the simple sum. Divisia confirms the stability of the money demand function and reflects portfolio shifts in response to changes in the opportunity cost of money. Divisia-based GDP nowcasting performs better in times of financial turmoil than the simple sum. Lastly, Divisia mitigates the price puzzle phenomenon relative to the conventional measure. We conclude that Divisia monetary aggregates would improve the effectiveness of monetary policy in Russia.
Saudi Arabia
2020 Macroeconomic Policies and Econometric Models for the Kingdom of Saudi Arabia
Ryadh M. Alkhareif
Book titled "Macroeconomic Policies and Econometric Models for the Kingdom of Saudi Arabia" containing a number of chapters about Divisia (in Arabic).
2020 Estimating the Money Demand Function for Saudi Arabia Using Divisia Monetary Aggregate
Ryadh M. Alkhareif and Moayad Al Rasasi
This paper constructs the broader Divisia monetary aggregate (D2) for the Kingdom of Saudi Arabia over the period from 1999 to 2018. Unlike the traditional money supply aggregate (M2), movements of the Divisia monetary aggregate seems to reflect the domestic economic developments and hence can be very useful when setting macroeconomic policies in the Kingdom. In addition, the paper applies the Keynesian Money Demand Theory to estimate the demand for money using the Divisia monetary aggregate. The findings confirm the stability of the money demand function for Saudi Arabia.
2018 Nowcasting Real GDP for Saudi Arabia
Ryadh M. Alkhareif
Saudi Arabia has embarked on a bold socioeconomic reform program under Vision 2030 to diversify the economy and further improve living standards for citizens. The Saudi government had indeed made significant strides towards implementing wide-ranging structural reforms as set out in the Vision Realization Programs. Given the rapid pace of the reforms and their significant impact on macroeconomic conditions, it is becoming increasingly important to monitor economic activity in real time to ensure sound policy and investment decision-making.

Like in many other countries, GDP data in Saudi Arabia are published with lags and subject to substantial revisions. Traditionally, policymakers and investors in Saudi Arabia have relied on a number of economic indicators to assess economic activity such as Purchasing Managers' Index, point of sale transactions, cash withdrawals from ATMs, letters of credit, automobile sales, cement production, electricity consumption, real estate developments, and the performance of the stock market. While these indicators are to some extent useful, they often tend to provide mixed inferences about the state of the economy.

To overcome this issue, the paper constructs monthly GDP nowcasts for Saudi Arabia by estimating a Generalized Dynamic Factor Model (GDFM) on a panel of 272 variables over the period from January 2010 to June 2018. The GDP nowcasts produced in this paper can accurately mimic GDP growth rates for Saudi Arabia, including for the non-oil sector. Our GDFM has outperformed other traditional models in tracking the business cycle in Saudi Arabia. In our view, the non-oil private sector GDP nowcasts provided in this paper can substitute the traditional set of indicators used to monitor monthly private sector activity.
2015 Core Inflation Indicators for Saudi Arabia
Ryadh M. Alkhareif and William A. Barnett
This paper constructs and analyzes core inflation indicators for Saudi Arabia for the period of March 2012 to May 2014 using two alternative approaches: the exclusion method (ex food and housing/rent) and the statistical method. The findings of the analysis suggest that the ex food and housing/rent inflation is more volatile than the overall CPI inflation over the sample period. In contrast, the statistical core inflation is relatively more stable and less volatile. Moreover, the ex food and housing/rent inflation is only weakly correlated with headline inflation, whereas the statistical core inflation exhibits a stronger correlation. This combination of lower volatility and higher correlation with headline inflation makes the statistical method a much better choice for policymakers. From a monetary policy standpoint, using a bundle of core inflation measures, including both properly constructed exclusion and statistical methods, is more desirable, especially when variation across measures is widespread, as is the case in Saudi Arabia.
2015 Modern and Traditional Methods for Measuring Money Supply: The Case of Saudi Arabia
William A. Barnett and Ryadh M. Alkhareif
This paper compares the "simple-sum" monetary aggregates (M1 and M2) published by the Saudi Arabian Monetary Agency (SAMA) with the new monetary aggregates (D1 and D2)—known as the Divisia monetary indexes. The former aggregates are constructed from a simple accounting identity, whereas the Divisia aggregates are constructed using statistical index number theory and aggregation theory. The findings suggest that both D1 and M1 are identical, given the perfect substitutability of the monetary components within those aggregates. For the broader monetary aggregates where perfect substitutability assumption is not realistic, the two monetary indexes differ substantially. SAMA could benefit by using both monetary indexes simultaneously to better monitor liquidity in the market.
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
2009 Linear and Nonlineaer Techniques for Estimating the Money Demand Function for Saudi Arabia
Mamdooh Saad Alsahafi
This research is a Ph.D. thesis at the University of Kansas
Singapore
2021 Constructing Divisia Monetary Aggregates for Singapore
William A. Barnett and Van H. Nguyen
Since Barnett derived the user cost price of money, the economic theory of monetary services aggregation has been developed and extended into a field of its own with solid foundations in microeconomic theory. Divisia monetary aggregates have repeatedly been shown to be strictly preferable to their simple sum counterparts, which have no competent foundations in microeconomic aggregation or index number theory. However, most central banks in the world, including that of Singapore, the Monetary Authority of Singapore (MAS), still report their monetary aggregates as simple summations. Recent macroeconomic research about Singapore tends to focus on exchange rates as a monetary policy target but ignores the aggregate quantity of money. Is that because quantities of money are irrelevant to economic activity? To examine the role of monetary quantities as potential monetary instruments, indicators, or targets and their relevance to predicting real economic activity in Singapore, this paper applies the user cost of money formula and the recently developed credit-card-augmented Divisia monetary aggregates formula to construct monetary services indexes for Singapore. We produce those state-of-the-art monetary services indexes from Jan 1991 to Mar 2021. We see that Divisia measures behave differently from simple sum measures in the period before the year 2000, while interest rates were high. Credit-card-augmented Divisia monetary services move closely with the conventional Divisia monetary aggregates, since the volume of credit card transactions in Singapore is relatively small compared with other monetary service assets. In future work, we plan to use our data to explore central bank policy in Singapore and to propose improvements in that policy. By making our data available to the public, we encourage others to do the same.
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
South Africa
2018 The Divisia monetary aggregates, demand for money stability, income, and inflation fluctuations in selected sub-Saharan Africa
Shehu El-Rasheed
The financial sector reforms adopted in the 4 selected Sub-Saharan Africa (SSA) countries, namely Kenya, Malawi, Nigeria, and South Africa have resulted to a remarkable change in the composition of monetary aggregates making the simple sum measure of money questionable. The reforms affect the stability of money demand function and create uncertainty in the macroeconomic environment leading to a slow growth and high inflation rates. This study constructs a new Divisia monetary aggregates for 4 selected SSA countries and investigate the role of monetary aggregates in the money demand stability, income and price fluctuations. Two variables; monetary uncertainty (MOU) and output uncertainty (OUU) were incorporated into the model. The study employed quarterly time series data covering 2000Q1 to 2015Q3. The ARDL and Toda Yamamoto causality methods were utilized in the analysis. The main objective of the study is to investigate the role of monetary aggregates in monetary policy decisions. The results indicate that Divisia monetary aggregates perform well in explaining the stability of money demand functions. Both MOU and OUU are quite significant in the money demand stability. The study added to the existing literature on money demand by empirically exploring the impact of the MOU and OUU on money demand stability using an alternative monetary aggregate. The results also shows a significant two-way causality between money and income, however, money and prices signifying an endogeneity in money supply. The Divisia monetary aggregates perform relatively well in explaining income and prices fluctuations. The important policy implication of this finding is that monetary targeting could be more appropriate for the 4 selected SSA countries monetary policy decisions and therefore that monetary aggregates can be used to influence the growth in income and to minimize price fluctuations.
South Korea
2000 The Signals from Divisia Money in a Rapidly Growing Economy
Jeong Ho Hahm and Jun Tae Kim
This paper appeared in the book, Belongia and Binner (2000), pp. 200-226.
1999 Rationale for Divisia Monetary Aggregates in 'Deregulated' Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing Limited, pp. 67-111.
Spain
2002 Analysing Divisia Aggregates for the Euro Area
H. E. Reimers
This paper, using pre-euro data, is Discussion Paper 13/02, Economic Research Centre of the Deutsche Bundesbank, Frankfurt.
Sri Lanka
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Switzerland
2000 Simple-sum versus Divisia Money in Switzerland: Some Empirical Results
Robert Fluri and Erich Spoerndli
This paper appeared in the book, Belongia and Binner (2000), pp. 102-119.
1996 Monetary Aggregates in Switzerland
H. Genberg and S. Neftci
This paper appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1991 Divisia Monetary Services Indexes for Switzerland: Are They Useful for Monetary Targeting?
P. Yue and R. Fluri
This paper appeared in the Federal Reserve Bank of St. Louis Review, vol. 73, pp. 19-33.
Taiwan
2017 Modelling Money Shocks in a Small Open Economy: The Case of Taiwan
Jane M. Binner and Logan J. Kelly
This paper (which appeared in the British journal, The Manchester School) explores the relevance of the Divisia monetary aggregate in Taiwan over the period January, 1985 through to June, 2016.
2004 Financial Innovation and Divisia Money in Taiwan: Comparative Evidence from Neural Network and Vector Error-Correction Forecasting Models
J. M. Binner, A. M. Gazely, S. H. Chen, and B. T. Chie
This paper appeared in Contemporary Economic Policy, vol. 22, pp. 213-224.
2002 Financial Innovation in Taiwan; An Application of Neural Networks to the Broad Monetary Aggregates.
J. M. Binner, A. M. Gazely, and S. H. Chen
A revised version of this paper appeared in European Journal of Finance, vol. 8, pp. 238-247.
2000 Divisia Monetary Aggregates for Taiwan
Y. C. Shih
This paper appeared in the book, Belongia and Binner (2000), pp. 227-248.
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing
Thailand
1999 Rationale for Divisia Monetary Aggregates in Deregulated Asian Developing Economies
M. S. Habibullah
This paper appeared in the book, M.S. Habibullah (Ed.), Divisia Monetary Aggregates and Economic Activities in Asian Developing Economics, Aldershot, Ashgate Publishing.
Turkey
2017 Divisia and Simple Sum Monetary Aggregates: Any Empirical Relevance for Turkey?
Umurcan Polat
In this study, a Divisia index is constructed to test its predictive power on quantities and prices compared to its simple sum counterpart. Accordingly, a Divisia index is built-up for Turkish economy for the period 2006-2016 to see whether the utilization of the Divisia monetary aggregates in the conduct of monetary policy makes any difference compared to that of traditional simple sum money supply. Under different specifications, though the relative power of the Divisia aggregates in predicting quantity and price variables is found, still, it can be argued that theoretically well-rounded formation of the Divisia index is not that much empirically justified for the case of Turkey.
2009 An Empirical Study of Simple Sum and Divisia Monetary Aggregation: A Comparison of Their Predictive Power Regarding Prices and Output in Turkey
Dogan Karaman
This research is a PhD thesis at the University of Kansas.
2009 Comparison of Simple Sum and Divisia Monetary Aggregates Using Panel Data Analysis
S. Celik and S. Uzun
This paper appeared in the International Journal of Social Sciences and Humanity Studies, vol. 1, pp. 1-13.
2008 Divisia Measure of Currency and Asset Substitution for Turkey
Ayse Ozden Birkan
This paper is in Essays on Turkish Monetary Policy, PhD thesis, University of Utah
2006 Alternative Measures of Currency and Asset Substitution: The Case of Turkey
Ayse Ozden Birkan
This pape is a Policy Innovations working paper.
1999 Divisia Monetary Aggregates: An Empirical Investigation of Their Usefulness for Turkey
S. Celik and S. Uzun
This research is a PhD thesis at the University of Nebraska.
1993 Türkiye’deki Parasal Büyüklükler İçin İndeks ve Bilesim Teorisinin Bir Uygulamasi: Divisia ve Fisher İndeksi
Kursat Kunter
This paper is written in Turkish.
United Arab Emirates
2012 Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and William A. Barnett
This paper is forthcoming in the book, W. A. Barnett and F. Jawadi (eds.), Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, Emerald Press.
United Kingdom
2022 Is Policy Causing Chaos in the United Kingdom?
William A. Barnett, Giovanni Bella, Taniya Ghosh, Paolo Mattana, Beatrice Venturi
In the journal, Economic Modelling.

We study the stability properties and conditions for the onset of Shilnikov chaos in the UK New Keynesian macroeconomy, as well as the shifts in equilibrium dynamics under various policy regimes. Shilnikov chaos emerges for a restricted part of the free parameter space in the baseline rational expectations UK model with no regime switching. Chaos did not occur, when the UK's central bank showed a weak response to inflation in the high-inflation regime, while it appears easily in the low-inflation regime associated with the central bank’s use of aggressive monetary policy in recent years. As a policy alternative for restoring uniqueness, the local analysis proposes tightening the monetary policy rule via the Taylor coefficient. But we find that doing so could hasten the emergence of Shilnikov's chaotic dynamics. The magnitude of the Taylor coefficient thus becomes central in attaining the desired long run steady-state.
2021 Targeting Nominal Income under the Zero Lower Bound: The Case of the Bank of England
Michael T. Belongia, Peter N. Ireland
The Bank of England, like other central banks that use an interest rate as their policy variable, faces practical problems for implementation of monetary policy when interest rates are constrained by their zero lower bound. The quantity of money, however, faces no such constraint and, for that reason, policies that emphasize control of the money supply may offer an alternative path toward achievement of a central bank's nominal objectives. A simple model rooted in Quantity Theory principles suggests this is possible if the quantity of money is measured properly and slow-moving trends in velocity can be accommodated in the policy's implementation.
2018 "Risky" Monetary Aggregates for the UK and US
Jane M. Binner, Sajid Chaudhry, Logan Kelly, and James L. Swofford
We extend the scope of monetary aggregation beyond capital certain assets that make up central bank data sets and identify groups of assets that form monetary aggregates composed of both capital certain and risky, capital uncertain, assets. We construct monetary aggregates for the US and UK using a superlative index and relax a key assumption of the Consumption Capital Asset Pricing Model (CCAPM), a one year planning horizon, by using forecasted returns on risky assets. Our new risky monetary aggregates perform well in VAR tests. We recommended exploring risky assets as providers of liquidity services in future research on this topic.
2015 Evidence that Risk Adjustment is Unnecessary in Estimates of the User Cost of Money
Diego A. Restrepo-Tobón
Investors value the special attributes of monetary assets (e.g., exchangeability, liquidity, and safety) and pay a premium for holding them in the form of a lower return rate. The user cost of holding monetary assets can be measured approximately by the difference between the returns on illiquid risky assets and those of safer liquid assets. A more appropriate measure should adjust this difference by the differential risk of the assets in question. We investigate the impact that time non-separable preferences has on the estimation of the risk-adjusted user cost of money. Using U.K. data from 1965Q1 to 2011Q1, we estimate a habit-based asset pricing model with money in the utility function and find that the risk adjustment for risky monetary assets is negligible. Thus, researchers can dispense with risk adjusting the user cost of money in constructing monetary aggregate indexes.
2013 Amendments to Divisia Money Series
R. Berar and J. Owladi
This article describes improvements to be implemented to the Bank of England's Divisia money series and its components, effective the next edition of Bankstats to be published on 1st March 2013.
2010 Household-Sector Money Demand for the UK
R. Bissoondeeal, B. Jones, J. M. Binner, and A. W. Mullineux
This paper appeared in the journal, Manchester School (Economic and Social Studies), vol. 78, pp. 90-113.
2009 Financial Innovation in the UK: New Tier-Adjusted Household Sector Monetary Services Indexes
J. M. Binner
A revised version of this paper appeared in Global Business and Economics Review, vol. 11, pp. 44-64.
2009 Comparison of Simple Sum and Divisia Monetary Aggregates Using Panel Data Analysis
S. Celik and S. Uzun
This paper appeared in the International Journal of Social Sciences and Humanity Studies, vol. 1, pp. 1-13.
2009 An Evaluation of UK Risky Money: an Artificial Intelligence Approach.
J. M. Binner, A. M. Gazely, and G. Kendall
A revised version of this paper appeared in Global Business and Economics Review, vol 11, issue 1, pp. 1-18.
2008 A Note on the Optimal Level of Monetary Aggregation in the U.K.
T. Elger, B. E. Jones, D. Edgerton, and J. M. Binner
A revised version of this paper appeared in Macroeconomic Dynamics, vol. 12, pp. 117-131.
2006 Estimating a Regular Continuous-Time System of Demand for World Monies with Divisia Data
K. P. Donaghy and D. M. Richard
This paper appeared in the book, Belongia and Binner (2006), pp. 76-103.
2005 Divisia Money
Matthew Hancock
This paper appeared in the Bank of England Quarterly Bulletin, Spring, pp. 39-46.
2004 The UK Household Sector Demand for Risky Money
T. Elger and J. M. Binner
This paper appeared in Berkeley Electronic Press, Topics in Macroeconomics Series, vol. 4, no. 1, article 3.
2000 A Neural Network Approach to the Divisia Index Debate: Evidence from Three Countries
A. M. Gazely and J. M. Binner
A revised version of this paper appeared in Applied Economics, vol. 32, pp. 1607-1615.
2000 Weighted Monetary Aggregates for the UK
Leigh Drake, K. Alec Chrystal, and Jane M. Binner
This paper appeared in the book, Belongia and Binner (2000), pp. 47-78.
1996 On the Demand for Divisia and Simple-Sum M3 in German
E. Gaiotti
This paper appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1996 The Demand for Divisia Money by the Personal Sector and by Industrial and Commercial Companies
N. Janssen
This paper appeared in the Bank of England Quarterly Bulletin, November, pp. 405-409.
1996 Financial Innovation and Monetary Aggregates in the UK
J. L. Ford and A. Mullineux
This paper appeared in the book, A. Mullineux (ed.), Financial Innovation, Banking, and Monetary Aggregates, Edward Elgar, Cheltenham.
1993 Divisia Measures of Money
P. G. Fisher, S. Hudson, and M. Pradhan
This paper appeared in the Bank of England Quarterly Bulletin, vol. 33, no. 2. pp. 240-252.
1992 The Substitutability of Financial Assets in the U. K. and the Implication for Monetary Aggregation
Leigh Drake
This paper appeared in Manchester School of Economics and Social Studies, vol. 60, pp. 221-248.
1991 An Admissible Monetary Aggregate for the United Kingdom
Michael T. Belongia and Alec K. Chrystal
This paper appeared in the Review of Economics and Statistics, vol. 73, pp. 497-503.
1988 A Monetary Services Index
R. Batchelor
This paper appeared in Economic Affairs, vol. 8, pp. 17-20.
United States
2011 Advances in Monetary and Financial Measurement
Center for Financial Stability
AMFM will be a central source for Divisia monetary aggregates data for the US and the rest of the world. While much of the data will be contributed, some US data will be produced by, and proprietary to, the CFS.
2011 A Comprehensive Revision of the U.S. Monetary Services (Divisia) Indexes
Richard G. Anderson and Barry E. Jones
This paper about the St. Louis Federal Reserve Bank's Divisia monetary aggregates is forthcoming in the Federal Reserve Bank of St. Louis Review, Sept/Oct, vol. 93, no. 4, 2011.
1984 The New Divisia Monetary Aggregates
William A. Barnett, Edward K. Offenbacher, and Paul A. Spindt
This paper, based upon Barnett (1980), contains the first empirical comparisons of Divisia monetary aggregates with simple-sum monetary aggregates in policy applications. That paper, published in the Journal of Political Economy, vol. 92, 1984, pp. 1049-1085, has been reprinted as chapter 17 of the book, Barnett and Serletis (2000).
1981 Aggregation of Monetary Assets
William A. Barnett
The landmark paper that began the modern literature on monetary aggregation and index number theory is Barnett's "Economic Monetary Aggregates: An Application of Index Number and Aggregation Theory," Journal of Econometrics, September 1980, pp. 11-48, and has been reprinted in the book, Barnett and Serletis (2000), as chapter 2. The published paper cannot be put online, since the copyright is owned by the publisher. But the original, longer working paper, which contains more than appears in the published journal article, appeared as chapter 7 of Barnett's book, Consumer Demand and Labor Supply. Since that book now is out of print, we can put that chapter online and have done so here.
1980 Economic Monetary Aggregates: An Application of Aggregation and Index Number Theory
William A. Barnett
This paper contains the first derivation of the Divisia money formula and the first computation and use of Divisia monetary aggregates. The paper also contains the derivation and use of the Fisher idea monetary-aggregation formula. The paper appeared in the Journal of Econometrics, vol. 14, pp. 11-48, and was reprinted in the book, Barnett and Serletis (2000), as chapter 1.
Uruguay
2016 Divisia Monetary Aggregates and Demand for Money in Uruguay
Jose Ignacio Gonzalez
In this paper Divisia monetary aggregates were built for Uruguay in the period 1998.Q4- 2015Q2 and compared with traditional monetary aggregates. The difference increases in broader aggregates, being very small for M1 but significant for the case of M2 + bonds. Then these measures were incorporated into a money demand function and using error correction models short-run dynamics was examined, finding a quick adjustment towards long run equilibrium and with Divisia models a higher semi-elasticity for the opportunity cost of money. Over the six candidates, Divisia M2 model perform better and is the appropriate measure to track money demand and complement monetary policy analysis.
World
2006 Estimating a Regular Continuous-Time System of Demand for World Monies with Divisia Data
K. P. Donaghy and D. M. Richard
This unique paper contains the only currently-available construction of a World Divisia monetary aggregate. The analytically sophisticated approach to that aggregation over world monies used numerical integration in continuous time. The paper appeared in the book, Belongia and Binner (2006), pp. 76-103.