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On Measuring the Money Supply

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  • Steve H. Hanke

Abstract

Oskar Morgenstern warned in The Limits of Economics (1937), that the formulation of economic policy was handicapped by the lack of relevant data and errors in its measurement. In this paper, the measurement of the money supply is used to illustrate Morgenstern's point. The most relevant measure of money for purposes of nominal national income determination is an inclusive, broad money metric. Most central banks fail to report the most inclusive broad money metrics, and what is reported are measured with the use of simple-sum aggregates. Divisia monetary aggregates are superior to simple-sum aggregates. These superior measures are used and data are reported for the United States by William A. Barnett at the Center for Financial Stability in New York.

Suggested Citation

  • Steve H. Hanke, 2019. "On Measuring the Money Supply," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 20(1), pages 55-64, January.
    • Handle: RePEc:wej:wldecn:733
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=733
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    Cited by:

    1. Dery, Cosmas & Serletis, Apostolos, 2021. "Interest Rates, Money, And Economic Activity," Macroeconomic Dynamics, Cambridge University Press, vol. 25(7), pages 1842-1891, October.

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