Indexed Units of Account: Theory and Assessment of Historical Experience
AbstractAn indexed unit of account is a money analogue, used to express prices; the unit's" purchasing power is defined by an index. Indexed units of account are not true money in that" they are not used as a medium of exchange. The first successful indexed unit of account Unidad de Fomento (UF) has been used in Chile since 1967, and has been copied in Colombia Ecuador, Mexico, and Uruguay. The reasons for creating such units are discussed from the" standpoint of monetary theory. The experience with such units in Chile is discussed. It is argued" that important practical problems in implementing indexation were solved by creating such" indexed units of account. The existing indexed units of accounts may not be ideal for all" purposes, however, and alternative definitions of the units, relating the units to measures of" income, may also be advantageous. The indexed units of account might someday be" monetized,' i.e., institutions such as debit cards may be devised to allow the units to be used for" all transactions, so that the role of conventional money might be reduced to clearing-house" functions only.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6356.
Date of creation: Jan 1998
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Publication status: published as Chapter 4 in "Indexation, Inflation, and Monetary Policy," edited by Fernando Lefort and Klaus Schmidt-Hebbel, Volume 2 of the series "Banca Central, Análisis y Políticas Económicas" of the Central Bank of Chile, 2002, pp. 105-134
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Other versions of this item:
- Robert J. Shiller, 2002. "Indexed Units of Account: Theory and Assessment of Historical Experience," Central Banking, Analysis, and Economic Policies Book Series, in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.), Indexation, Inflation and Monetary Policy, edition 1, volume 2, chapter 4, pages 105-134 Central Bank of Chile.
- Robert J. Shiller, 1998. "Indexed Units of Account: Theory and Assessment of Historical Experience," Cowles Foundation Discussion Papers 1171, Cowles Foundation for Research in Economics, Yale University.
- Robert Shiller, 1998. "Indexed Units of Account: Theory and Assessment of Historical Experience," Working Papers Central Bank of Chile 28, Central Bank of Chile.
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
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