Simple Sum vs Divisia Monetary Aggregates : An Empirical Evaluation

This paper attempts an empirical evaluation of Divisia moneyary aggregates for India ,constructed using four assets, viz, currency with the public, net demand deposits with banks, net time deposits with banks, and post office savings deposits. The performance of these aggregates in relation to simple sum aggregates is evaluated in terms of some standard tests such as the J-test, information content test, and the money demand test. The results suggest that the Divisia monetary aggregates have a clear edge over thei simple sum counterpart