Naslov
Weighted monetary aggregates for Croatia

Autori
Belullo, Alen ; Ivančić, Moris

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, sažetak, znanstveni

Izvornik
Future World by 2050 / - Pula, 2017, 57-57

ISBN
978-953-7320-57-7

Skup
8th International Conference "Future World by 2050"

Mjesto i datum
Pula, Hrvatska, 01.07.2017. - 03.07.2017

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Podatak o recenziji nije dostupan

Ključne riječi
Divisia monetary aggregates ; Currency equivalent monetary aggregates ; Simple sum aggregation
(Divisia monetary aggregates ; Currency equivalent monetary aggregates ; Simple-sum aggregation)

Sažetak
The Croatian national bank calculates only simple-sum monetary aggregates. Such method of aggregation implicitly assumes that components of a monetary aggregate are perfect substitutes. Although all monetary assets could relatively easily, and at low cost, be converted into currency, there are significant differences in the opportunity cost of their holding. Empirical research suggests that economic agents often hold in their portfolios different monetary assets, with different opportunity costs, not only assets with the lowest opportunity costs. This suggests that economic agents do not see monetary assets as perfect substitutes. Therefore, a valid method of aggregation of monetary assets must preserve information of the elasticity of substitution. Weighted monetary aggregates have strong foundations in aggregation theory and they are consistent with assumptions of microeconomic optimization. The best known weighted monetary aggregates based on index numbers are Divisia index and Currency equivalent (CE) index. In the first part of this paper we derive Divisia index and CE index from the maximization of consumer’s utility function, in the second part we calculate Divisia and CE index for Croatia. Finally we investigate if Croatian weighted monetary aggregates contain additional information of price and real economic activity movements, and make them, for this reason, better monetary aggregates than simple-sum aggregates, for use in economic analysis and monetary policy making.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA