Does Liquidity Matter? Properties of a Divisia Monetary Aggregate in the Euro Area
AbstractThis paper builds a quarterly Divisia monetary aggregate for the euro area using area-wide data over the sample period from 1980 to 2000, finding two main results. First, it is found that the demand for this monetary aggregate has been well behaved and relatively stable over the last two decades. Secondly, the Divisia-weighed monetary aggregate is found to have interesting information content from a forward-looking perspective. This lends support to the view that money and - in a broader sense - liquidity services should be assigned an important role in shaping monetary policy in the euro area, although the policy maker is not interested in monetary aggregates "per se". Copyright 2004 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.
Volume (Year): 66 (2004)
Issue (Month): 3 (07)
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- Jones, Barry E. & Stracca, Livio, 2006. "Are money and consumption additively separable in the euro area? A non-parametric approach," Working Paper Series 0704, European Central Bank.
- Makram El-shagi & Logan J Kelly, 2014.
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- Richard G. Anderson & Barry Jones, 2011. "A comprehensive revision of the U.S. monetary services (divisia) indexes," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 325-360.
- Jones, Barry E. & Fleissig, Adrian R. & Elger, Thomas & Dutkowsky, Donald H., 2008. "Monetary policy and monetary asset substitution," Economics Letters, Elsevier, vol. 99(1), pages 18-22, April.
- Carl Chiarella & Roberto Dieci & Xue-Zhong He, 2008. "Heterogeneity, Market Mechanisms, and Asset Price Dynamics," Research Paper Series 231, Quantitative Finance Research Centre, University of Technology, Sydney.
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