According to the monetarist concept, there are relationships tested between monetary base (MB) and monetary aggregate
(M2), monetary aggregate
and industrial production index (IP_CR), and monetary aggregate
and consumer price index (CPI).
Properties of a synthetic Divisia monetary aggregate
in the Euro Area.
Here we employ M2 as the monetary aggregate
because M2 growth is closely monitored by the monetary authorities of Taiwan, who have never targeted non-borrowed reserves as a strategy of money policy.
Since its inception, the ECB has evaluated monetary developments relative to a "reference value" for growth in the monetary aggregate
And yet the Federal Reserve stopped reporting the broadest monetary aggregate
, M3, last year, and the time has long since past that it reported growth rate targets for money aggregates.
He estimates that equilibrium relationship using the monetary aggregate
M1 as the measure of money with data up to 1985 and argues that there is a stable relationship between those variables with a unitary income elasticity and with a strong negative response of real balances to the nominal interest rate (see box 1 for definitions of the different monetary aggregates
2001; hereafter PSS) to develop an empirically weighted broad monetary aggregate
for the United States and to demonstrate the advantages of this type of aggregate from a monetary policy perspective.
Figure 4 displays the M2 monetary aggregate
, the combination of currency and demand deposits, measured monthly over the 1926-35 period.
In the United States, the favored monetary aggregate
among monetarists, particularly Milton Friedman, during the early to mid-1970s was simple sum M2.
However, monetary targeting in Germany and Switzerland is quite different from a Friedman-type monetary targeting rule, in which a monetary aggregate
is kept on a constant-growth-rate path and is the primary focus of monetary policy.
The findings depend greatly on the monetary aggregate
used to measure money growth.
It is now accepted that M2 is the most relevant monetary aggregate
used for the purposes of monetary analysis in Pakistan.