Derivatives: a Monetary Aggregate Approach by Divisia Index: the Importance of Transmission Mechanism on the Development of Derivatives

Does Central Banks loose their control on Monetary Policy? The main scope of the book is to test the empirical validity of enriching money demand function with derivatives using the new monetary aggregates. As a result it is concluded that monetary policy has lost some effectiveness after the introduction of derivative instruments to the financial markets. In the application part time series models are used for modeling money demand and supply.