The demand for Divisia money by the personal sector and by industrial and commercial companies

Quarterly Bulletin 1996 Q4
Published on 01 December 1996

By Norbert Janssen of the Bank’s Monetary Assessment and Strategy Division.

This article updates previous Bank analysis of Divisia money. It assesses the demand for Divisia money by the personal sector and by industrial and commercial companies (ICCs). Divisia money weights the component assets of M4 according to an estimate of the transactions services they provide. As an index of total liquidity in the economy Divisia might therefore be more closely related to spending than simplesum monetary aggregates. The article concludes that a sectoral analysis of Divisia money can contain important information about future spending.

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