Estimation of a New Monetary Aggregate in Local Currency for the Peruvian Economy

This article examines the construction of a new monetary aggregate for the Peruvian economy, with the aim of measuring its contribution to the nominal value of transactions. The research is situated within the context of the theoretical debate on the definitions and measures of liquidity, specifically evaluating the turnover, monetary equivalent, and currency approaches. A turnover approach is used to formulate a more representative monetary aggregate that takes into account the turnover rate of various monetary assets. Through time-series analysis, it is established that the new aggregate exhibits stationary properties, in contrast with traditional liquidity measures, and allows for the formulation of a stable money demand function. The results indicate that the demand for money in Peru is significantly sensitive to gross domestic product and inflation, with estimated elasticities of 0.72 and 0.10, respectively. The policy implications suggest that a more appropriate concept of liquidity can improve the design of monetary policy and help achieve equilibrium in the money market. (Abstract and audio: Department of Economic Publications)