A new monetary aggregates measurement: Application to Taiwanese data

This paper compares the different dynamics of simple sum monetary aggregates and PLS indexes over the business cycle, which have turning points at economic expansion and recession phases. We also investigates the long run relationship between monetary aggregates and GDP, to utilize the data in the most efficient manner via the nonparametric rank test of cointegration analysis proposed by Breitung (2001), and the impulse response functions to find the response of GDP to innovations in PLS and simple sum aggregates from 1969Q1 to 2010Q3.