Monetary Aggregates as Targets: Some Theoretical Aspects

Abstract

for helping influence his thinking on the subject. The opinions expressed in this paper are those of the author and no responsibility for them should be attributed to the Bank of Canada or the National Bureau of Economic Research. The research reported here is part of the NBER's research program in Financial Markets and Monetary Economics.

The Optimal Level of Monetary Aggregation

“…Then new money market assets would be incorporated immediately, by definition of the aggregate. The procedure would be analogous to that used in 39For example, Friedman [33, p. 155] states that "In my opinion no 'fundamental issues' in either monetary theory or monetary policy hinge on whether the estimated elasticity can for most purposes be approximated by zero or is better approximated by -.1 or -.5 or -2.0, provided it is seldom capable of being approximated by -<.< 40See, for example, note 23 and section 4 of [32].…”