The variability of velocity calculated using divisia money indices is not necessarily lower than that using a conventional monetary aggregate, i.e., M2.
Figure 1: Log GDP divided by M2 (bold black), by MZM divisia (tan), by M1M divisia (green), by M2M divisia (red), by M3M divisia (pink), by M4M divisia (light blue), all 1967Q1=0. Numbers in (parentheses) are standard deviations for 1967-2019. NBER defined peak-to-trough recession dates shaded gray. Source: BEA (2023Q2 second release), Federal Reserve Board via FRED, Center for Financial Stabiity, NBER, and author’s calculations.
All the log velocity variables fail to reject the ADF unit root null (intercept, trend), and reject the KPSS trend stationary null. The standard deviation of M2 velocity is the smallest of all. In first differences, the standard M2 velocity and the divisia M2 velocity are about the same.
Ghost Busters!
What about the velocity of Justin Herbert’s passes?? How does Herbert’s pass velocity work out compared to M2 velocity and does Harwick think that the last 10 years of severe head injuries to football players show that the NFL needs to go back to leather helmets??
https://images.app.goo.gl/mnSxyfspyxt9RTeEA
Does Harwick like boxers or briefs?? I mean can’t you get serious just once Menzie, and take up these questions I am asking you to ask Harwick?!?!?! Damn it man. And what does Harwick think about the existence of aliens Menzie?!?!?! What does Harwick think about putting a limit on plastic bag usage by consumers?? Does Harwick think we should or should not poke rats with needles to make advances in the curing of terminal diseases!?!?!?! Damn it Menzie, I want you to ask Harwick these questions, and I want you to ask RIGHT NOW!!!! Not tomorrow!!! Understand???
I don’t understand how Menzie got his PhD if he never talked to Harwick?? That’s disingenuous by Menzie. Bad on Menzie.
Menzie Chinn,
Your goalposts moveth. Anyway, the below moves the goalposts back… however temporarily.
https://www.sciencedirect.com/science/article/abs/pii/S0313592622000480
https://www.mercatus.org/media/160896/download?attachment
Again, you should contact the authors who you disagree with and debate with them instead of quip-posting on this (often) void of a blog. Why not write an article refuting their stances? Why not invite them on this blog as a guest? Why not comment on their blogs to discuss? Otherwise these all seem to be nothing more than yet another sad effort to boost your ego via arousing your handful of fanboys who flood the comment section with absolutely zero substance.
Again, your behavior is very Trump-like… happily and hastily blog (tweet) claims but won’t actually engage the sources (show up to a debate).
“Your goalposts moveth. Anyway, the below moves the goalposts back… however temporarily.”
The accusation of moving the goalposts is JohnH’s favorite trick. And we know he is the dumbest troll God ever created. But if you want to set the goalposts differently, clearly state what they should be. Neither one of your papers does so. Or did you not understand these two papers either?
Now if you want to displace JohnH as troll of the year – you are off to a great start.
econned seems to have an agenda with his prompting. of course, econned has no right to tell prof. chinn what he should or should not discuss. if econned thinks the topic is important and that he has valid points, he is welcome to create his own blog and bloviate ad nauseam. he has not done that. probably because nobody would visit his site. econned relies on prof. chinn to provide him an audience for his snake oil pitches. professional jealousy at work, AGAIN.
Let’s give Econned a little credit for finally telling us what Barnett was:
Is money demand really unstable? Evidence from Divisia monetary aggregates by
William A. Barnett, Taniya Ghosh, Masudul Hasan Adil
Econned in an earlier comment accused Dr. Chinn of not reading this paper. But wait – Dr. Chinn did read this paper noting it was about money demand not QTM. Now I read this paper and Dr. Chinn did read it. One has to wonder if Econned read it or if he did – did he not understand it.
From Econned’s second paper:
I use the percentage change from one year ago of Divisia M2 to measure money growth and of the consumer price index (CPI) to measure inflation. The data are obtained from the Center for Financial Stability and the Federal Reserve
Bank of St. Louis’s FRED database. I estimate the model using monthly data and 12 lags over a sample period beginning in 1967. I estimate two samples. The first sample uses data from 1967 through 2020 to provide a forecast of inflation for the subsequent 12 months of 2021. The second sample uses data from 1967 through 2021 to provide a forecast of inflation in 2022. The purpose of this simple model is not to argue that this is the optimal or best-fitting forecasting model of inflation, but rather to determine the degree to which an accurate forecast of inflation
can be gained using only data on money growth and inflation over the past year
Wait – his series started in 1967. Good, good. Dr. Chinn’s series started in 1967. Moving the goal posts. Not to insult the University of Mississippi but it seems Dr. Chinn held the data to higher standards than this dude did. So disingenous,
Menzie is Trump-like? Econned, who cannot write a simple blog comment with including a small-minded insult, might want to take a look in the mirror…from a therapist’s couch. (Are couches still a therapy thing, or is that just in costume dramas?)
Iwill repeat my earlier question to Econned, who is too cowardly to answer: Who are you to assign tasks to Menzie? So what if you told him what to do? You’re nobody. You don’t get to asign homework,you sad little man.
The dude from Mississippi used to work for the American Institute of Economic Research before he joined the Mercatus Center.
Econned loves to cite all the finest right wing trash.
But, but, but Econned wrote QED. Whatever that means.
“Isabella Weber Has Neoliberal Economists Running Scared…
By pointing to the role of profits, Weber has freed the discourse on rising prices from the straitjacket imposed on it by mainstream theories of inflation. From the simple fact that “prices rise because firms raise them,” a theoretical superstructure has been erected in recent decades that excludes firms’ price-setting capabilities and their distributional effects. In their absence, such anti-statist perspectives reduce inflation to crude money printing and ballooning government debt. Thanks to Weber’s analysis, the focus has now shifted to policy instruments such as price controls and windfall profit taxes, and thus on capital, rather than on adjustments to the income of the working class resultant from the unemployment induced by monetary policy.” https://jacobin.com/2023/08/isabella-weber-greedflation-inflation-profit-margins-economics
It’s pretty amazing how mainstream economists, rather than take the current bout of inflation as a learning opportunity, chose instead to double down on existing ideology. Nowhere was this more evident than the Chicago Booth survey, where mainstream economists overwhelmingly discarded and disparaged any thought that Corporate America was a significant contributor to inflation.
Now Isabella Weber has revealed that the emperor has no clothes. The question remains–why is it that so many esteemed academics disregarded the probable role of Corporate America, which had the means, the motive, and the opportunity to raise prices faster than costs? Why did “experts” ignore an obvious Occam’s Razor approach and promote all sorts of complex and dubious explanations rather than simply examine the behavior of those who set prices? Of course, most Americans believed that corporations were responsible, while experts’ explanations conveniently masked and diverted attention from that explanation. Just coincidence?
Did little Jonny boy just read this? This was covered here many times a long time ago. Oh well at least little Jonny boy hasn’t made any more false accusations over Zelensky’s wife alleged spending.
“Isabella Weber Has Neoliberal Economists Running Scared”
My candidate for dumbest title of an opinion piece this year. What Weber wrote might be of importance but when I read titles such as this one – the rest of the piece has to be a total waste of time.
I want my comments to be taken separate from JohnH’s. Nonetheless, The reaction to Weber’s paper and assertions was WAY out of proportion. Why the perceived threat?? The response to Weber, giving a different context, was childish.
Another report from the slow but inevitable build up of Ukraine’s military and degradation of Russia’s.
https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-august-31-2023
“Ukrainian forces have reached parity in counterbattery capabilities with Russian forces.[3] Baranov stated that NATO-provided artillery systems with ranges of 30km to 40km allow Ukrainian forces to destroy Russian artillery systems and force Russian forces to move their artillery further from the frontline.[4] Ukrainian officials previously made statements in late July indicating that Ukraine’s interdiction campaign is successfully degrading Russian counterbattery capabilities.[5] Russian sources have repeatedly expressed concerns since mid-July over the lack of Russian counterbattery artillery capabilities, particularly in southern Ukraine.[6]”
It should be noted that there is also a mismatch between the high accuracy of HIMARS systems vs the Russian artillery. Pushing the Russian artillery back from the frontline will make it even less able to hit Ukrainian targets. When Ukraine reach Tokmak the 30-40 km reach of their artillery would allow them to cut the land bridge, even without boat on the shore of the Sea of Azov.
GDP/M2 was relatively stable from 1967 to 1990 while the other velocity series were not. This adoration for Divisia money seems to be more of a religion than paying attention to the actual data.
GDP/M2 was relatively stable from 1967 to 1990 while the other velocity series were not. This adoration for Divisia money seems to be more of a religion than paying attention to the actual data.
That M2 (Me too?) curve looks like my personal velocity curve since 1968.