Analogical modeling

In econometrics and official statistics, and particularly in banking, the Divisia monetary aggregates index is an index of money supply. It is a particular application of a Divisia index to monetary aggregates.

Background

The monetary aggregates used by most central banks (notably the U.S. Federal Reserve) are simple-sum indexes, in which all monetary components are assigned the same weight:

$M_t=\sum _{j=1}^n{x}_{jt},$

where $x_{jt}$ is one of the $n$ monetary components of the monetary aggregate $M_t$. This summation index implies that all monetary components contribute equally to the money total, and it views all components as dollar for dollar perfect substitutes. It has been argued that such an index does not weigh these components in a way that properly summarizes the services of the quantities of money.

Over the years, there have been many attempts at properly weighting monetary components within a simple-sum aggregate. An index can rigorously apply microeconomic- and aggregation-theoretic foundations in the construction of monetary aggregates. This approach to monetary aggregation was derived and advocated by William A. Barnett (1980) and has led to the construction of monetary aggregates based on Diewert's (1976) class of superlative quantity index numbers. The new aggregates are called the Divisia aggregates or Monetary Services Indexes. Salam Fayyad's 1986 PhD dissertation did early research with those aggregates using U.S. data.

This Divisia index (approximated in discrete time) is defined as

$\log M_t^D-\log M_{t-1}^D=\sum _{j=1}^n{s}_{jt}^{*}(\log x_{jt}-\log x_{j,t-1}),$

according to which the growth rate of the aggregate is the weighted average of the growth rates of the component quantities. The discrete time Divisia weights are defined as the expenditure shares averaged over the two periods of the change

$s_{jt}^{*}=\frac{1}{2}(s_{jt}+s_{j,t-1}),$

for $j=1,...,n$, where

$s_{jt}=\frac{{\pi }_{jt}{x}_{jt}}{\sum _{k=1}^n{\pi }_{kt}{x}_{kt}},$

is the expenditure share of asset $j$ during period $t$, and ${\pi }_{jt}$ is the user cost of asset $j$, derived by Barnett (1978),

${\pi }_{jt}=\frac{R_t-r_{jt}}{1+R_t},$

which is just the opportunity cost of holding a dollar's worth of the $j$th asset. In the last equation, $r_{jt}$ is the market yield on the $j$th asset, and $R_t$ is the yield available on a 'benchmark' asset that is held only to carry wealth between different time periods.

In the literature on aggregation and index number theory, the Divisia approach to monetary aggregation, $M_t^D$, is widely viewed as a viable and theoretically appropriate alternative to the simple-sum approach. See, e.g., International Monetary Fund (2008), Macroeconomic Dynamics (2009), and Journal of Econometrics (2011). The simple-sum approach, $M_t$, which is still in use by some central banks, adds up imperfect substitutes, such as currency and non-negotiable certificates of deposit, without weights reflecting differences in their contributions to the economy's liquidity. A primary source of theory, applications, and data from the aggregation-theoretic approach to monetary aggregation is the Center for Financial Stability in New York City. More details regarding the Divisia approach to monetary aggregation are provided by Barnett, Fisher, and Serletis (1992), Barnett and Serletis (2000), and Serletis (2007. Divisia Monetary Aggregates are available for the United Kingdom by the Bank of England, for the United States by the Federal Reserve Bank of St. Louis, and for Poland by the National Bank of Poland. Divisia monetary aggregates are maintained for internal use by the European Central Bank, the Bank of Japan, the Bank of Israel, and the International Monetary Fund.

References

• Barnett, William A. "The User Cost of Money". Economics Letters (1978), 145-149.

• Barnett, William A. "Economic Monetary Aggregates: An Application of Aggregation and Index Number Theory," Journal of Econometrics 14 (1980), 11-48.

• Barnett, William A. and Apostolos Serletis. The Theory of Monetary Aggregation. Contributions to Economic Analysis 245. Amsterdam: North-Holland (2000).

• Barnett, William A., Douglas Fisher, and Apostolos Serletis. "Consumer Theory and the Demand for Money". Journal of Economic Literature 30 (1992), 2086-2119.
• Diewert, W. Erwin. "Exact and Superlative Index Numbers". Journal of Econometrics 4 (1976), 115-146.

• Divisia, Francois. "L'Indice Monétaire et la Théorie de la Monnaie," Revue D'Économie Politique 39 (1925), 842-864.

• Fayad Salam. "Monetary Asset Component Grouping and Aggregation: An Inquiry into the Definition of Money". (Salam Fayad's Ph.D. thesis, University of Texas, 1986.)

• International Monetary Fund. "Monetary and Financial Statistics Compilation Guide." (2008), 183-184.

• Journal of Econometrics, special issue on "Measurement with Theory," Elsevier journal, Amsterdam, vol. 161, no. 1, March (2011).

• Liu, Jia Why the Fed Got it Wrong: The Divisia Index, American Institute for Economic Research (2013).

• Macroeconomic Dynamics, special issue on "Measurement with Theory," Cambridge University Press journal, Cambridge, UK, vol 13, supplement 2 (2009).
• Serletis, Apostolos. The minimal educational requirement to take the REA or RES examination is four GCE "" level passes or equal. When you have taken the obligatory preparatory course offered by a CEA Authorised Course Supplier and want to apply for the exam, please click on right here.
  
  In an ordinary Singapore Tenancy Agreement, there is usually the reimbursement clause together with the diplomatic clause. This clause states that in the event you train the diplomatic clause, you will have to reimburse a part of the commission the landlord had paid to his agent. Figures additionally show that the number of property agents registered with the Council for Estate Companies (CEA) The property company watchdog mentioned property agents who did not continue with their registration were part timers Tuas South Road 5 Industrial Website on the market So the right way to be a Real Estate Agent in Singapore? Be registered with just one Licensed Estate Agent (Actual Estate Firm) Abroad Property Analysis Experiences Region Property Consultancy & Management Providers Pte Ltd UE Square (D09) – Residence For Hire
  
  final January. There are also fewer property companies in business, down by 5% to lower than 1,500. Other than passing a compulsory examination, registered property brokers also have to endure six hours of Some business players stated new agents face a tough time juggling this and shutting property deals. With a purpose to make the TA a sound authorized document to be honoured by all parties involved, it must be stamped by the Singapore Inland Revenue Authority (IRA). The costs for this process, a so-known as "stamp obligation", are to be borne by the tenant. Softening in residential property costs proceed, led by 2.8 per cent decline within the index for Remainder of Central Area Freehold improvement in the prestigious Ardmore Park / Claymore district with potential for en bloc sale
  
  An expert property agent in Singapore will assist you and defend your interest all through the purchase, secure the provide for you at the best possible price. With a a lot better data of Singapore, the agent can be in a greater position to recommend and recommendation on the selection of property. He may even ensure that all documents are in order and you might be coping with the rightful owner of the property. Singapore 529508 Contact Leon in OrangeTee or click here to read more if you wish to be property agent – Singapore Real Property Salesperson. Rental estate agent for condominiums, bungalows, semi-detached or public apartments in Singapore. Luxurious condo close to Somerset MRT Condominium For Sale – St Thomas Suites (D09) Singapore Contractors Affiliation Ltd Search
  
  Freehold Condo near Orchard The Edge on Cairnhill – Condominium For Sale One-cease service for expatriate and foreign patrons. Collection of properties for lease and for sale in Singapore. Property brokers for sale or rental of properties assisting property house owners and those searching for properties to rent or buy. Residences, homes and HDB's. Blk 138 Lorong Ah Soo, Singapore 530138. Commercial and residential property real property agents. 31 Scotts Road, Dean's Property Centre, Singapore 228225. Excessive-end apartment in singapore close to Orchard Road Condominium For Sale – Paterson Residence (D09) Property agent / real estate agent coping with leasing, rental, sale and buy of business and residential properties Meet the Manager Singapore Glass Affiliation REMAX Singapore New Launches
  
  Property companies embrace buy, sell or hire properties, financial planning, pattern forecasts, relocation, interior design and actual estate planning. Condominium For Lease – The Balmoral (D10) Shopping for a house is a large funding that calls for much consideration and research. The same applies for selling or renting a property, the place a lot effort and time should be spent in negotiating for supreme prices. To watch itemizing and transacted prices Our mistake was that we didn't have our personal agent. One that could have defined all this to us, why it was needed and so forth. But we still did not realise this at the moment, we just assumed that this agent (named A) was serving to us. Little did we know "A" was truly the homeowners agent and we had no 'declare' on him in any respect.
  
  Vendor Pays the Buyer's Dealer Commission via his itemizing agent. Underneath a Purchaser's Broker arrangement, the named brokerage and agent represent the customer. The price paid to the broker mostly is paid by the vendor. Some buyer dealer agreements include clauses that will compensate the brokerage for the price it's due less the quantity paid by the vendor. When I managed to sell a property for my shopper at double fast time and at a really good worth. The worth was higher than most models being bought at the moment. It was a lot of onerous work and naturally Luck performed an enormous part. The Consumer was very very grateful. Sellers pay a 2% commission. May be decrease for more expensive properties. CONTACTING ME We Will Achieve Your Wants And Desires In Actual Estate The Demand for Money: Theoretical and Empirical Approaches. Springer (2007).