@article{Aggregation::4243,
      recid = {4243},
      author = {Cockerline, Jon and Murray, John},
      title = {A Comparison of Alternative Methods of Monetary  Aggregation: Some Preliminary Evidence},
      publisher = {Bank of Canada},
      address = {1981},
      pages = {1 online resource (viii, 58 pages)},
      abstract = {The monetary aggregates presently computed have a number  of restrictive structural characteristics which could limit  their usefulness as economic indicators and policy targets,  when these aggregates are used to measure the volume of  liquidity or "money" in the economy. Their simple linear  structure implicitly treats all the included monetary  components as perfect substitutes, and imposes an additive  unit-weighted utility function on all asset holders.  Additionally, the traditional aggregates are very selective  and exclude non-bank monetary assets. In this paper we  construct and test a number of alternative, "superlative",  monetary aggregates. These new aggregates have a more  flexible functional form and give explicit recognition to  the heterogeneous nature of various financial instruments  by assigning a unique price weight to each monetary  component. Superlative monetary aggregates are compared  with conventional (summation) monetary aggregates in three  critical areas: information content, causality, and  stability. While superlative aggregates tend to follow more  consistent time paths than summation aggregates, their  overall performance is very mixed. Superlative monetary  aggregates appear to contain less information on  contemporaneous and future income levels than their  summation counterparts, and fail to provide any new  insights on money-income causality. Equations explaining  their behaviour do, however, display greater parameter  stability at broad levels of aggregation, providing weak  evidence in favour of superlative aggregation. This is not  the case at narrower levels of aggregation. All of these  findings are generally consistent with the results of  similar tests in the United States and, taken together,  suggest that narrow conventional aggregates are at least as  good as and perhaps better than any existing alternatives.  Though superlative aggregation in general has much to  recommend it, the superlative monetary aggregates appear to  be affected by a number of practical and theoretical  problems which may limit their viability as alternatives to  the conventional money measures.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/4243},
      doi = {https://doi.org/10.34989/tr-28},
}