Wednesday, November 30, 2016

Brian Romanchuk — Primer: Monetary Aggregates

Mysticism about money is damaging to economic theory. This shows up in even the most fundamental questions, such as defining what “money” really is. It is clear that the developed countries are “monetary societies,” and behaviour is very different from those societies where money is either not used or highly ceremonial in nature. Unfortunately, our usage of the word money is often muddled, as we say things like “she made a lot of money selling used cars,” even though what we really mean is that “she earned a high income selling used cars.” For those with an interest in describing macroeconomic behaviour, such vagueness is not enough; we have to pin down what we mean by money.
If money were to be abolished from economic theory, the only references to money might be in reference to the monetary aggregates. This primer explains the definitions of these aggregates (without diving into the institutional differences between different regions)....
Bond Economics
Primer: Monetary Aggregates
Brian Romanchuk

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