Monetary Asset Separability : Some Non-Parametric Evidence

This paper applies Varian's(1982,1983) non-parametric tests to obtain weakly separable monetary assets for aggregation. Using annual data (1970-1996) it was found that the official monetary aggregates M2, M3 and M4 are theoretically admissible. Some new separable groups were also obtained in the process for this period suggesting construction of alternative monetary aggregates. However test results from monthly data suggested M3 and M4, the broader aggregates to be theoretically admissible