As a result, monetary aggregates
cannot be used alone to predict or control inflation.
Following the banking deregulation in the 1980s, the rapid development of electronic payments in the 1990s also fostered the use of components of broader monetary aggregates
for transaction purposes.
The switching regression approach of Feldstein and Stock (1996) has also been applied to Canadian monetary aggregates
by Siklos and Barton (2001).
In a model that reflects Temin's view, contemporaneous movements In monetary aggregates
would respond to contemporaneous real output movements, but not vice versa; the economic interpretation is that real output movements do not respond contemporaneously to unpredicted monetary movements.
When applying these theories to the construction of monetary aggregates
, it becomes apparent that the components included should be weighted depending on the monetary services they provide.
Consistent with that interpretation, the Committee decided to retain the current ranges for the monetary aggregates
for 1998, as well as the range for debt, and to carry them over on a provisional basis to next year.
In response, Bank of Canada Governor Gerald Bouey announced in November of that year the policy which became known as gradualism: The Bank would target the growth rate of the narrowly defined monetary aggregate
M1, made up of currency plus demand deposits at chartered banks.
The Federal Reserve now publishes three monetary aggregates
and two related, broader financial aggregates.
The estimates of alternative monetary aggregates
and their comparison are reported in Section 4.
That said, how do we account for the rapid growth in the monetary aggregates
This is accomplished by making comparisons among simple sum, Divisia, and currency equivalent (CE) monetary aggregates
using the Anderson et al.
A number of other members also commented that the strength of the monetary aggregates
, especially if it should persist, was suggesting ample liquidity and accommodative financial conditions.