Money supply | Money velocity | Gross output | Shadow prices | NGDP | Investment

 

Money supply

 

We suspect that there is a useful middle ground between narrow and broad measures of the money supply, and attempt to define and identify an Austrian version called 'MA'. It can be viewed as a hybrid of M1 and MZM for the current UK economy and we show how it relates to M4 and M4ex.

Our special report (released in June 2011) explains in more detail the composition, but note than in January 2012 we made some important updates (see here for an overview). We will endeavour to backdate MA and provide more details on the changes but encourage comments and feedback in the meantime.

Money velocity

Data available: quarterly | Last updated: 2011 Q1

Our measure of money velocity comes from the equation of exchange and is defined as (PY)/M. We use CPI, GDP, and M4.

 

 

Gross output

Data available: annually | Last updated: 2008

By only focusing on final goods and services GDP has two major limitations: (i) it underestimates the amount of economic activity in the economy (by ognoring the full structure of production); (ii) it overestimates the role of consumption as a driver of recovery. Using Input-Output tables we can reveal the annual amount of "Gross Output" in relation to GDP.

 

For more information: Skousen, Mark (2001) "Beyond GDP: A Breakthrough in National Income Accounting" The Freeman, 51(4).

Shadow prices

Data available: quarterly | Last updated: 2011 Q1

This chart shows the relationship between CPI and CPI that is adjusted to take into a productivity norm (PN). It is based on George Selgin's work, and shows the inflation rate if underlying productivity changes were permitted to manifest themselves.

 

See:

  • Dowd, Kevin (1995) "Deflating the productivity norm" Journal of Macroeconomics, 17(3):717-732
  • Selgin, George A., (1995) "The case for a 'productvity norm': Comment on Dowd" Journal of Macroeconomics, 17(4):733-740

On inflation expectations

 

 

NGDP

 Source: HM Treasury

 

 

Investment

 

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