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The Information Content of Alternative Monetary Aggregate: Simple-Sum Versus Divisia Money in Selected Asian Countries

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  • Muzafar Shah Habibullah

    (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia)

Abstract

The use of Divisia monetary aggregate has been proposed in the economic literature to take into account the different degrees of liquidity of the interest-bearing financial assets included in defining ‘money’. Despite the theoretical implication of the Divisia approach as an appropriate measurement of monetary services, the investigation has been mostly limited to developed countries. In this paper, the approach is applied to Asian monetary aggregates; the performance of the Divisia monetary aggregates together with its counterpart, the conventional Simple-sum aggregates, were then tested for their information content about national income using Granger-causality technique. Our results suggest that there is a role for Divisia monetary aggregate as intermediate indicator for policy purposes in the ‘deregulated’ Asian economies.

Suggested Citation

  • Muzafar Shah Habibullah, 1998. "The Information Content of Alternative Monetary Aggregate: Simple-Sum Versus Divisia Money in Selected Asian Countries," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 35(2), pages 140-176, December.
    • Handle: RePEc:phs:prejrn:v:35:y:1998:i:2:p:140-176
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    File URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/84/512
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    Cited by:

    1. William A. Barnett & Kun He & Jingtong He, 2022. "Consumption Loan Augmented Divisia Monetary Index and China Monetary Aggregation," JRFM, MDPI, vol. 15(10), pages 1-17, October.

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