Divisia measures of money

Quarterly Bulletin 1993 Q2
Published on 01 June 1993

Interest has increased in recent years in index-number measures of money which weight the different components within each monetary aggregate. Proponents of these index-number measures argue that they should be a more helpful indicator of monetary conditions than the current aggregates which are constructed on a simple-sum basis. This article assesses Divisia measures of money, including the theoretical arguments for the Divisia approach to monetary aggregation. It also describes the construction of a Divisia index for the United Kingdom and the indicator properties of such an index.

PDFDivisia measures of money

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