Simple Sum vs Divisia Monetary Aggregates: An Empirical Evaluation

Economic and Political Weekly, Vol XXXVI, No4 P.317-326, 2001

10 Pages Posted: 10 Dec 2006

See all articles by Debashis Acharya

Debashis Acharya

Indian Institute of Technology Madras

Bandi Kamaiah

University of Hyderabad

Abstract

This paper attempts an empirical evaluation of Divisia moneyary aggregates for India ,constructed using four assets, viz, currency with the public, net demand deposits with banks, net time deposits with banks, and post office savings deposits. The performance of these aggregates in relation to simple sum aggregates is evaluated in terms of some standard tests such as the J-test, information content test, and the money demand test. The results suggest that the Divisia monetary aggregates have a clear edge over thei simple sum counterpart.

JEL Classification: E51

Suggested Citation

Acharya, Debashis and Kamaiah, Bandi, Simple Sum vs Divisia Monetary Aggregates: An Empirical Evaluation. Economic and Political Weekly, Vol XXXVI, No4 P.317-326, 2001, Available at SSRN: https://ssrn.com/abstract=950521

Debashis Acharya (Contact Author)

Indian Institute of Technology Madras ( email )

Sardar Patel Road
Guindy
Chennai, TN Tamil Nadu 600036
India

Bandi Kamaiah

University of Hyderabad ( email )

Central University (PO)
Andhra Pradesh
Hyderabad, CA 500 046
India

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