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Economic Quarterly

Summer 1994

A Shift-Adjusted M2 Indicator for Monetary Policy

Robert M. Darin and Robert L. Hetzel

In the past, over periods of several years, the growth rate of the public's dollar expenditure has corresponded to the growth rate of the monetary aggregate M2. At present, however, M2 is growing significantly slower than dollar expenditure. About half of this slowness can be explained by the recent, rapid growth of bond and stock mutual funds.

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