Incorporating Riskt Assets in Divita Monetary Aggregates.

Capital uncertain or risk assets are typically excluded from traditional broad monetary aggregates. Barnett et al (1997), however, extend the Divisia aggregation methodology to incorporate such assets. In addition, recent evidence provided by Drake et al (1998) auggests that risky assets are close substitutes for monetary assets. This paper constructs 'wide' Divisia monetary aggregates which include risky assets such as unit trusts (mutual funds), equities and bonds, and contrasts their empirical properties with conventional Divisia and simple sum broad money aggregates.