Currency Equivalent Monetary Aggregates-Do They Have an Edge over Their Simple Sum Counterparts

Do They Have an Edge over Their Simple Sum Counterparts?
Debashis Acharya Bandi Kamaiah This paper attempts an empirical evaluation of a new monetary aggregate called the currency equivalent monetary aggregate (CEMA) by considering four assets, viz, currency with the public, net demand deposits with the banks, net time deposits with the banks, and post office savings deposits. The performance of CEMA 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 currency equivalent monetary aggregate has a clear edge over its simple sum counterpart.