Divisia monetary aggregates and demand for money in kenya dickson khainga introduction i n designing monetary policy, many countries assign greater weight to the role of the stock of money in. Divisia money and the corresponding simple sum aggregate are highly correlated in normal times but begin to diverge before the crisis. Decomposition analysis has been done to see the factors which are primarily responsible for changes in co 2 emissions. On the demand side, there is no reason to differentiate among inside money, outside money, regulated services, or shadow banking services.
Accordingly, a divisia index is builtup for turkish economy for the period 20062016 to see whether the utilization of the divisia monetary aggregates in the conduct of monetary policy makes any difference. The main properties of the indices are listed, noting the assumptions needed for each. Barnett is the oswald distinguished professor at the university of kansas, director of the center for financial stability in ny city, and senior research fellow at the ic 2 institute of the university of texas at austin. Logarithmic mean divisia index lmdi decomposition analysis. To that end, we construct the divisia m3 for germany, the largest economy in the euro area. 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 simplesum basis. This short paper is the encyclopedia entry on divisia monetary indexes to appear in the second edition of the international encyclopedia of the social sciences. Divisia monetary aggregates and demand for money in kenya. The new divisia monetary aggregates university of kansas.
This study aims to investigate the performance of environmental protection and economic growth by measuring carbon productivity in the construction field. Barnett 1980, are derived from economic aggregation and index number theory and aim to aggregate the money. In brief, the general approach consists of regarding each asset as a joint product having different degrees of moneyness, and defining the quantity of money as the weighted. Somewhat more accessible discussions of divisia s work may be found in frischs survey article on the theory of index numbers lo and in wolds book on demand analysis 18. The original cfs divisia monetary aggregates measure demandside monetary services, using the economic aggregation and index number theory developed by barnett 1980. Chinas lowcarbon industrial transformation assessment. These changes aim to make the banks series more theoretically appealing and to make use of some recently developed statistics. Second, the information content of the divisia monetary aggregate as regards future output. Decomposition of aggregate energy and gas emission. Somewhat more accessible discussions of divisias work may be found in frischs survey article on the theory of index numbers lo and in wolds book on demand analysis 18. This chapter builds monthly timeseries of divisia monetary aggregates for the gulf area for the period of june 2004 to december 2011, using areawide data. Thus, it is of great practical significance to identify driving.
Identifying driving factors of jiangsus regional sulfur. The divisia index decomposition method presented above has been adopted in many studies see the survey given in ang, 1995. The name comes from francois divisia who first proposed and formally analyzed the indexes in 1926, and discussed in related 1925 and 1928 works the divisia index is designed to incorporate quantity and price changes over time from subcomponents that. Carbon productivity is the amount of gross domestic product generated by the unit of carbon emissions.
A divisia index is a theoretical construct to create index number series for continuoustime data on prices and quantities of goods exchanged. European monetary aggregation, which uses indices for monetary services, seems attractive because these indices can account for the imperfect substitutability between different currencies. It will be called the conventional divisia index method. This article assesses divisia measures of money, including the theoretical arguments for the divisia approach to monetary aggregation. In the same way we may assume that there exists a value index function v. Introduction the system of energy intensity indicators is designed to track the changes in energy intensity for the total u. Thus, it is of great practical significance to identify driving factors of. The decomposition analysis is based on the structureefficiency analysis for international.
The principal objective of this paper is to compare the performance of the divisia m4 monetary index with the standard simple sum measure of broad money in the context of composite leading indicators of inflation in the united kingdom. The research problem of this study is to examine the information content of the divisia m3 monetary aggregate in forecasting inflation in the euro area. Divisia inside money aggregates the center for financial. Pdf application of the divisia index with interconnected. Andrei draganescu, samuel pessoa and humberto moreira made valuable comments on related research. In fact, as a quantity index, the divisia index is by far the most widely used element of diewerts superlative class, because of the.
We suggest the use of a particular divisia index for measuring welfare losses due to interest rate wedges and inflation. In this study, a divisia index is constructed to test its predictive power on quantities and prices compared to its simple sum counterpart. A decomposition analysis of industrial co 2 emissions is used for thee paths for chinas lowcarbon transition theres not much influence of the population drivers on the overall co 2 emissions further energy intensity improvement and decarbonisation process of gdp are main factors. Currently, ceeol covers more than 2000 journals and 480. Logarithmic mean divisia index decomposition of co2. Proponents of an aggregation theoretic approach to money demand argue that simplesum measures do not capture the theoretical notion of money, especially for broad monetary aggregates. In econometrics and official statistics, and particularly in banking, the divisia monetary aggregates index is an index of money supply. Logarithmic mean divisia index is used to quantify the role of different important factors in co 2 emissions increase during 1980 to 2014 in seven major south asian countries bhutan, bangladesh, india, maldives, nepal, pakistan and sri lanka.
This file contains monthly data on the variables shown in section b of table 1 in the third article by anderson, jones and nesmith. Representing the index problem in the 2ndimensional quantitypricespace, it is now proposed to call natural index the limit of stepwise products of laspeyres, paasches or edgeworthmarshall s indices, if the steps approximate the straight line between the base point and the observed point. We focus on german data because, as barnett 2003 already emphasized, constructing a divisia index for the entire. Divisia indexes, money and welfare by rubens penha cysne ssrn. The logarithmic mean divisia index lmdi method is used to decompose the co2 emissions. Divisia monetary aggregates, demand for money, monetarism, index number theory.
Logarithmic mean divisia index is used to quantify the role of different important factors in co 2 emissions increase during 1980. We also offer an economic stability indicator for the gulf cooperation council gcc area by analyzing the dynamics pertaining to certain variables such as the dual price aggregates, aggregate interest rates, and the divisia. The name comes from francois divisia who first proposed and formally analyzed the indexes in 1926, and discussed in related 1925 and 1928 works. This monetary aggregation method is derived using the statistical index numbers theory handa, 2000. A thesis submitted in partial fulfilment of the requirements for the degree of master of commerce in financial markets.
Sep, 2012 the center for financial stability cfs has initiated a new divisia monetary aggregates database, maintained within the cfs program called advances in monetary and financial measurement amfm. The system employs a hierarchal structure in which time series indexes at lower levels of the. We compare summation versus divisia aggregation of monetary assets. Using international comparisons and log mean divisia index, this paper analyzes energy and co 2 emission trends of mexicos iron and steel industry during the period 19702006, examining co 2 emissions related to energy use and production process. The velocity behavior and information content of divisia monetary.
Environmental protection and economic growth are two indicators of sustainable global development. N i n l i r l the information content of monetary e r e. Barnett university of kansas april 18, 2006 abstract. Barnett this simple summation procedure is a very special case of the more general approach. Water resources are vital for agricultural production, and agriculture is a sector responsible for most water use kang et al. Diewert 1976 has proved that the divisia index lies within his class of superlative index numbers, which all are nearly identical numeri cally. The purpose of this paper is to determine the role of different important factors responsible for co 2 emissions increase in south asia.
In section 3, we use the results of section 2 to provide a rigorous interpretation of the jorgensongriliches method of measuring technical progress for discrete data. Private nonfinancial corporations in the united kingdom dmipncukq from q1 1977 to q4 2016 about divisia, academic data, united kingdom, nonfinancial, monetary aggregates, corporate, private, and indexes. A divisia index is a theoretical construct to create index number series for continuoustime data. Mar 14, 2005 by matthew hancock of the banks monetary assessment and strategy division. Proponents of these indexnumber measures argue that they should be a more helpful indicator of monetary conditions than the current aggregates which are constructed on a simplesum basis.
Properties of a synthetic divisia monetary aggregate in the euro area. In a second step, the countryspecific divisia indices are aggregated to. The divisia index is a continuous time index number formula due to francois divisia 19251926. This option overrides the sample command and defaults to the sample range in effect. A comprehensive revision of the us monetary services divisia. The monetary aggregates used by most central banks notably the us federal reserve are simplesum indexes in which all monetary components are assigned the same weight. Star and hall 1973 as a discrete approximation to the divisia 1926 index is also a superlative index number. Out of sample forecast analysis and a conditional forecast exercise show that the predictive content of this divergence. Using logarithmic mean divisia index to analyze changes in. By substituting the right hand side of equation 1 for the divisia index term in equation 2, we can get the unconditional elasticity of derived demand with respect to output price and the other input price, and the unconditional ownpricecrossprice elasticities. Specifies the ending observation to be used in estimation. The most important goal of the study is to find out, whether the divisia m3 monetary aggregate outperforms its simple sum counterpart. Divisia indexes, money and welfare 12 rubens penha cysne3 august 1, 2000 1this work beneted from conversations with robert e.
The demand for divisia money in a core monetary union. Application of the divisia index with interconnected factors in the warsaw stock exchange index wig fluctuation analysis. Darity and forthcoming from macmillan reference usa thomson gale. However, in order to implement the stricter target of sulfur dioxide emission reduction during the th fiveyear plan period, it is necessary to find a new solution as quickly as possible. Household sector in the united kingdom dmihsukq from q1 1977 to q4 2016 about divisia, academic data, sector, united kingdom, monetary aggregates, households, and indexes. Louis has published monetary index numbers initially referred to as divisia monetary aggregates and, later, as monetary services indexes msi for two decades, beginning with thornton and yue 1992 and continuing with anderson, jones, and nesmith 1997a,b,c and anderson and buol 2005. The contribution rates of each factor to emission changes are also assessed. Application of divisia index numbers was also suggested by divisia in 1952 9, pp.
Dickson khainga discusses the usefulness of divisia aggregates for monetary policy purposes by examining their importance in the demand function for money. No divisia monetary aggregates are available for the euro area, in contrast to the us, uk and several other countries4. Monetary aggregates, divisia index, currency equivalent, simplesum, gdpweighted growth rates, pca jel classification. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. This paper investigates the driving forces of changes in co2 emissions from the passenger transport sectors in different cities, which is helpful for formulating effective carbonreduction policies and strategies. This file contains quarterly and annual data on the variables shown in section b of table 1 in the third article by anderson, jones and nesmith. The natural index and the divisia index on the straight. These index numbers were first proposed by divisia in 1925 6, 7, 81. The divisia index is a continuoustime index number formula due to frans. An extended series of divisia monetary aggregates st. Pdf this short paper is the encyclopedia entry on divisia monetary indexes to appear in the second edition of the. The analysis shows that income effect and population effect are the major determinants in the. Advances in monetary and financial measurement amfm. Konyus and byush gens 1926 show that the geometric quantity index nrxrixsr where.
Divisia indexes, money and welfare by rubens penha cysne. In earlier papers the divisia index on the straight line was called natural index. Divisia monetary aggregates for the gcc countries emerald. The divisia price index pt and the divisia quantity index qt is given by solving these differential equations. Sep 21, 2017 the log mean divisia index method is used to investigate influential factors including carbon intensity, energy intensity and regional adjustment that impact on changes of carbon productivity. The information content of monetary statistics for the. Economic monetary aggregates an application of index number and aggregation theory.
Diewert, exact and superlative index numbers 117 if a quantity index qp, pr. A problem associated with its application is the existence of a residual in the results obtained since after approximation of. The log mean divisia index based carbon productivity in. Financial innovation and divisia monetary aggregates. Graph and download economic data for divisia money index. The paper goes on to discuss the conditions under which the divisia indices are. The log mean divisia index based carbon productivity in the. Ceeol provides scholars, researchers and students with access to a wide range of academic content in a constantly growing, dynamic repository. The urban transport sector has become one of the major contributors to global co2 emissions. We therefore create and make available a database on euroarea divisia monetary aggregates for january 2001september 2014, as detailed in the appendix. This paper is from an unpublished typescript written for a workshop at the university of north carolina in 1970, and is a summary of what was known at the time about divisia price indices, plus some illuminating sidelights. It is defined with respect to the time paths of a set of prices p 1 t,p n t and commodities x 1 t,x n t. The chinese government has made some good achievements in reducing sulfur dioxide emissions through endofpipe treatment.
The study utilises a range of data from the australian construction industry during 19952004 including energy consumption, industry value added and. The name integral index stems from the fact that pt is by definition 6. The velocity behavior and the information content of the divisia index are superior to. Barnett, who is the originator of divisia monetary aggregation and more broadly of the associated field of aggregationtheoretic monetary aggregation. E40, e51, e52 introduction in the aftermath of the global financial crisis hereafter gfc, global liquidity has. The decomposition analysis is based on the structureefficiency analysis for international comparisons, considering industrial structure and the. This paper introduces a divisia monetary aggregate for germany and explores its information content for the great recession. Recent studies using us data also underlined the usefulness of divisia money indicators for monetary analysis. The secondbest monetary aggregate was the former nextbroadest aggregate, m3, properly. Extensive published results demonstrate that the best monetary aggregate for almost all uses was the federal reserves former broadest aggregate, l, but only if computed as a properly weighted index number, such as the divisia or fisherideal index. E40, d60 3professor at the getulio vargas foundation and visiting scholar at the department of economics of the university of chicago. Compared to the existing options in the literature. In this paper, a distinctive decomposition approach, the generalized divisia index method gdim, is employed to investigate the driving forces of regional industrial sulfur dioxide emissions in jiangsu province and its three regions during 20042016.
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