This study shows how to construct monetary aggregates using a procedure to adjust the simple-sum, Divisia and empirical monetary aggregates to be consistent with weak separability. The corresponding adjusted monetary aggregates have considerable leading indicator information and provide the most...

A unified model of monetary policy and bank regulation is presented. In accordance with modern banking theory, banks not only intermediate loans and deposits but also provide a financial service affecting aggregate output. Optimal parameter settings for monetary and regulatory policy are...