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One Divisia money for Europe?


  • Leigh Drake
  • Andy Mullineux
  • Juda Agung


In 1992 the EU monetary authorities adopted a 'harmonized' broad money aggregate. The EMI was subsequently established to promote monetary policy coordination. This paper considers how broad money aggregates might be used to guide EU monetary policy and whether a 'Euro-Divisia' monetary index might provide a better guide than a 'Euro-simple-sum' aggregate. Our findings are based on data from the UK, France and Germany. They indicate that 'Euromoney' Granger-causes 'Europrices' and that the EuroDivisia monetary index is a better leading indicator of 'Euroinflation' than the Euro-simple-sum monetary aggregate.

Suggested Citation

  • Leigh Drake & Andy Mullineux & Juda Agung, 1997. "One Divisia money for Europe?," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 775-786.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:6:p:775-786
    DOI: 10.1080/000368497326697

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    References listed on IDEAS

    1. Amjad, Rashid, 1984. "The management of Pakistan's economy 1947-82," MPRA Paper 35850, University Library of Munich, Germany.
    2. Amjad, Rashid, 1987. "Human resource development: the Asian experience in employment and manpower planning - an overview," MPRA Paper 38135, University Library of Munich, Germany.
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    Cited by:

    1. Barnett, William A., 2003. "Aggregation-theoretic monetary aggregation over the euro area, when countries are heterogeneous," Working Paper Series 260, European Central Bank.
    2. William A. Barnett, 2011. "Multilateral Aggregation-Theoretic Monetary Aggregation over Heterogeneous Countries," World Scientific Book Chapters,in: Financial Aggregation And Index Number Theory, chapter 6, pages 167-206 World Scientific Publishing Co. Pte. Ltd..
    3. Binner, Jane M. & Bissoondeeal, Rakesh K. & Elger, C. Thomas & Jones, Barry E. & Mullineux, Andrew W., 2009. "Admissible monetary aggregates for the euro area," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 99-114, February.
    4. Jane M. Binner & Alicia M. Gazely & Shu-Heng Chen & Bin-Tzong Chie, 2004. "Financial Innovation and Divisia Money in Taiwan: Comparative Evidence from Neural Network and Vector Error-Correction Forecasting Models," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 213-224, April.
    5. Binner, J.M. & Tino, P. & Tepper, J. & Anderson, R. & Jones, B. & Kendall, G., 2010. "Does money matter in inflation forecasting?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(21), pages 4793-4808.

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