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Constructing Divisia Monetary Aggregates for the Asian Tigers

Author

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  • William A. Barnett

    (Department of Economics, University of Kansas, Lawrence, KS 66045, USA and Center for Financial Stability, New York City)

  • JongSoo Lee

    (Department of Economics, University of Kansas, Lawrence, KS 66045, USA)

  • Naowar Mohiuddin

    (Department of Economics, University of Kansas, Lawrence, KS 66045, USA)

Abstract

This study constructs Divisia monetary aggregates for the "Asian Tigers"—Hong Kong (1999-2024), South Korea (2009-2024), Singapore (1991-2021), and Taiwan (2005-2024)—and assesses whether Divisia monetary aggregates explain nominal GDP better than simple-sum money. Our findings demonstrate that Divisia indices respond more sensitively to economic shocks. For Hong Kong and Taiwan, narrow Divisia money provides the best explanations for fluctuations in nominal GDP. Our results suggest that Divisia monetary aggregates can be beneficial for monetary policy analysis in these countries and underscore the importance of further research into the empirical performance of Divisia monetary aggregates in macroeconomic prediction.

Suggested Citation

  • William A. Barnett & JongSoo Lee & Naowar Mohiuddin, 2024. "Constructing Divisia Monetary Aggregates for the Asian Tigers," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202413, University of Kansas, Department of Economics.
    • Handle: RePEc:kan:wpaper:202413
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