An alternative estimate of monetary aggregates in Argentina

Abstract

The amount of monetary assets existing in the economic system and some indicators of its behavior, such as the rate of growth and its circulation velocity, constitute key variables in monetary policy decisions and an essential determinant in the optimization processes of economic units. For this reason, its precise definition and consistent quantification seem to be basic topics in economic analysis. The use of certain conventional aggregates that group similar classes of monetary assets has become widespread for analytical purposes, which somehow implies assuming that economic units consider money defined in this way as a specific product in their optimization strategies. For these reasons it seems convenient to complement simple sum aggregation methods with more flexible formulas consistent with the optimizing behavior of economic units, which have a broader conceptual content and provide a measure of financial services rather than the stock of monetary assets. The purpose of this article is to carry out an alternative estimate of the monetary aggregates of Argentina based on recent developments in the economic theory of index numbers, examine their most important properties and suggest lines of action to compare the results obtained with conventional ones, evaluating their abilities to fulfill the functions generally assigned to money.

JEL classification: E51