Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Lecture 6: Measuring Money Mishkin chapter 3 – part B Page 57-63 1 Review def. of money 3 functions – lower transaction cost evolution of money quiz 2 Why do we care about measuring money – in the society Monetary policy: policy about money supply and interest rate. Money supply in the short-run affects interest rate and in the long-run affect macro-econ variables such as GDP, price level, etc. The Fed has some ability to manipulate and control the money supply, but the first step to measure it. 3 Money measurement 1. 2. Theoretical approaches: focuses the degree to which assets function as mediums of exchange "weighted aggregate" approach Empirical approach: base on which measure of money works best in helping to predict the movements of key macro variables. 4 Actual practice in the U.S. 5 Actual practice in the U.S. – cont’d M1 contains highly liquid assets that are directly usable as mediums of exchange (theoretical approach 1). As new forms of money-like instruments emerge, the Feb adopts broader measures of M2 and M3. M1 and M2 sometimes move together, sometimes don’t. 6 7 How reliable is the money data? There is difference between initially published data and revisions. Difference is because: small depository institutions report infrequently 2. seasonal adjustments 1. Differences average out to zero pay more attention with longer-run movements. 8 9 Recap Measuring the Money Supply: Actual Practice in the U.S. Reliability of U.S. Monetary Data Quiz 10