Review

The authors propose that bond and equity mutual funds ought to be added to M2, but offer some caveats. They review the recent behavior of M2 and its deterioration as a predictor of economic activity, provide historical background on the mutual fund industry, and ask whether bond and equity mutual funds meet the tests of “moneyness” usually applied to assets considered for inclusion in a monetary aggregate. 

This article examines empirical issues associated with whether M2+ would be useful in the conduct of monetary policy. 

Since early 1993, the Research Department of the Federal Reserve Bank of St. Louis has made data and programs for articles published in its Review available to the public. The files, developed during a pre-publication replication that assures the accuracy of an article’s empirical results, allow the interested reader to delve into the details of the author’s research. 

Commentary on “An Alternative Monetary Aggregate: M2 Plus Household Holdings of Bond and Equity Mutual Funds” by Sean Collins and Cheryl L. Edwards and “The Empirical Properties of a Monetary Aggregate That Adds Bond and Stock Mutual Funds to M2” by Athanasios Orphanides, Brian Reid, and David H. Small.

Commentary on “An Alternative Monetary Aggregate: M2 Plus Household Holdings of Bond and Equity Mutual Funds” by Sean Collins and Cheryl L. Edwards and “The Empirical Properties of a Monetary Aggregate That Adds Bond and Stock Mutual Funds to M2” by Athanasios Orphanides, Brian Reid, and David H. Small.

Commentary on “An Alternative Monetary Aggregate: M2 Plus Household Holdings of Bond and Equity Mutual Funds” by Sean Collins and Cheryl L. Edwards and “The Empirical Properties of a Monetary Aggregate That Adds Bond and Stock Mutual Funds to M2” by Athanasios Orphanides, Brian Reid, and David H. Small.

Commentary on “An Alternative Monetary Aggregate: M2 Plus Household Holdings of Bond and Equity Mutual Funds” by Sean Collins and Cheryl L. Edwards and “The Empirical Properties of a Monetary Aggregate That Adds Bond and Stock Mutual Funds to M2” by Athanasios Orphanides, Brian Reid, and David H. Small.

Commentary on “An Alternative Monetary Aggregate: M2 Plus Household Holdings of Bond and Equity Mutual Funds” by Sean Collins and Cheryl L. Edwards and “The Empirical Properties of a Monetary Aggregate That Adds Bond and Stock Mutual Funds to M2” by Athanasios Orphanides, Brian Reid, and David H. Small.