Academic Positions

  • Present 2015-09

    Research Associate

    Center for Financial Stability, New York City, Advances in Monetary and Financial Measurement (AMFM) Program

  • 2015-08 2015-05

    Summer Research Assistant

    University of Kansas, Department of Economics

  • 2015-05 2012-08

    Teaching Assistant

    University of Kansas, Department of Economics

Education & Training

  • Ph.D.Expected 2017

    Ph.D. in Economics

    University of Kansas, Department of Economics

  • Exchange Student2013 Summer

    Department of Economics

    University of Paris 1, Pantheon Sorbonne, Paris, France

  • B.A.2011

    Bachelor of Science in Mathematics and Applied Mathematics

    Renmin University of China, Beijing, China

Honors & Awards

  • Fall 2011 - Spring 2016
    University of Kansas Enhanced Graduate Fellowship
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    Continuously receiving the Enhanced Graduate Fellowship for five years. No work obligations in the first and fifth year.
  • Fall 2015 - Spring 2016
    University of Kansas Research Fellow
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    Awarded the title "University of Kansas Research Fellow" for Fall 2015 - Spring 2016 academic year.
  • October 2015
    Dissertation Proposal: Passed with Honors
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    The dissertation committee unanimously decided to pass my dissertation proposal "with honors."
  • Summer 2015
    KU Department of Economics Summer Research Fellowship
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    Awarded summer research fellowship to work with Professor William A. Barnett in the summer of 2015.

Publications Progress

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Data Sources for the Credit-Card Augmented Divisia Monetary Aggregates

William A. Barnett and Liting Su
Published In Fredj Jawadi (ed.), Banks and Risk Management, special issue of Research in International Business and Finance, Elsevier, vol. 39, Part B, pp. 899-910. The special issue is the Proceedings of Second International Workshop in Financial Markets and Nonlinear Dynamics, June 4-5, 2015, Paris. Publication year: 2017.

Abstract

In 2013, the Center for Financial Stability (CFS) initiated its Divisia monetary aggregates database, maintained within the CFS program called Advances in Monetary and Financial Measurement (AMFM), in accordance with Barnett (1980, 2012). The CFS is now making available Divisia monetary aggregates extended to include the transactions services of credit cards. The extended aggregates are called the augmented Divisia monetary aggregates and are available to the public in monthly releases. The new aggregates are also available to Bloomberg terminal users. The theory on which the new aggregates is based is provided in Barnett and Su (2014). In this paper, we provide detailed information on the data sources used in producing the new augmented Divisia monetary aggregates.

Joint Aggregation over Money and Credit Card Services under Risk

William A. Barnett and Liting Su
Published Economics Bulletin, Vol. 36 No. 4 pp. A223-A234. Publication year: 2016.

Abstract

Modern aggregation theory and index number theory were introduced into monetary economics by Barnett (1980). The widely used Divisia monetary aggregates, provided to the public in monthly releases by the Center for Financial Stability in NY City, are based upon that paper. A key result upon which the rest of the theory depended was Barnett's derivation of the user-cost price of monetary assets. To make that critical part of Barnett's results available prior to publication in the Journal of Econometrics, Barnett (1978) repeated that important proof two years earlier in Economics Letters. The extension of that literature to risk with intertemporally non-separable preferences subsequently appeared in Barnett and Wu (2005). To make that result available prior to publication in the Annals of Finance, the paper's theory without proofs was provided a year earlier by Barnett and Wu (2004) in the Economic Bulletin. The theory was extended by Barnett and Su (2016a) to include the services of credit card transactions volumes under risk. The theory will appear in the proceedings volume of a conference to be held in Rome in June 2017. The proceedings will appear as a special issue of the journal, Macroeconomic Dynamics, in late 2019 at the earliest. We are making available the key results from that paper below, without the proofs. Prior to publication of Barnett and Su (2016a), the proofs will be available in the paper's online working paper version, Barnett and Su (2016b).

The Use of Divisia Monetary Aggregates in Nominal GDP Targeting

William A. Barnett and Liting Su
Published In Vladimir Filipovski (ed.), Economic Recovery in the Post-Crisis Period, Proceedings of the International Conference at the Faculty of Economics - Skopje, Republic of Macedonia, May 29-30, 2015, pp. 27-39. Publisher: Ss. Cyril and Methodius University in Skopje. Publication year: 2015.

Abstract

One of the hottest topics in monetary policy research has been the revival of the proposal for “nominal GDP targeting.” Recent research has emphasized the potential importance of the Divisia monetary aggregates in implementing that policy. We investigate bivariate time series properties of Divisia money and nominal GDP to investigate the viability of recent proposals by authors who advocate a role for a Divisia monetary aggregate in nominal GDP targeting.

There are two particularly relevant proposals: (1) the proposal by Barnett, Chauvet, and Leiva-Leon (2015) to use a Divisia monetary aggregate as an indicator in the monthly Nowcasting of nominal GDP, as needed in implementation of any nominal GDP targeting policy; and (2) the proposal by Belongia and Ireland (2015) to use a Divisia monetary aggregate as an intermediate target, with nominal GDP being the final target of policy.

We run well known diagnostic tests of bivariate time series properties of the Divisia M2 and nominal GDP stochastic processes. Those tests are for properties that are necessary, but not sufficient, for the conclusions of Belongia and Ireland (2014) and Barnett, Chauvet, and Leiva-Leon (2015). We find no time series properties that would contradict those implied by either of those two approaches.

Risk Adjustment of the Credit-Card Augmented Divisia Monetary Aggregates

William A. Barnett and Liting Su
Forthcoming In Giovanni De Bartolomeo, Daniela Federici, and Enrico Saltari (eds.), Macroeconomic Advances in Honor of Clifford Wymer, special issue of Macroeconomic Dynamics.

Abstract

While credit cards provide transactions services, as do currency and demand deposits, credit cards have never been included in measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities, such as credit card balances, to assets, such as money. However, economic aggregation theory and index number theory measure service flows and are based on microeconomic theory, not accounting. Barnett, Chauvet, Leiva-Leon, and Su (2016) derived the aggregation and index number theory needed to measure the joint services of credit cards and money. They derived and applied the theory under the assumption of risk neutrality. But since credit card interest rates are high and volatile, risk aversion may not be negligible. We extend the theory by removing the assumption of risk neutrality to permit risk aversion in the decision of the representative consumer.

The Use of Divisia Monetary Aggregates in Nominal GDP Targeting

William A. Barnett and Liting Su
Forthcoming International Journal of Business and Globalisation, special issue containing selected papers from the May 2015 International Conference on Economic Recovery in the Post-Crisis Period, Skopje, Republic of Macedonia.

Abstract

One of the hottest topics in monetary policy research has been the revival of the proposal for “nominal GDP targeting.” Recent research has emphasized the potential importance of the Divisia monetary aggregates in implementing that policy. We investigate bivariate time series properties of Divisia money and nominal GDP to investigate the viability of recent proposals by authors who advocate a role for a Divisia monetary aggregate in nominal GDP targeting.

There are two particularly relevant proposals: (1) the proposal by Barnett, Chauvet, and Leiva-Leon (2015) to use a Divisia monetary aggregate as an indicator in the monthly Nowcasting of nominal GDP, as needed in implementation of any nominal GDP targeting policy; and (2) the proposal by Belongia and Ireland (2015) to use a Divisia monetary aggregate as an intermediate target, with nominal GDP being the final target of policy.

We run well known diagnostic tests of bivariate time series properties of the Divisia M2 and nominal GDP stochastic processes. Those tests are for properties that are necessary, but not sufficient, for the conclusions of Belongia and Ireland (2014) and Barnett, Chauvet, and Leiva-Leon (2015). We find no time series properties that would contradict those implied by either of those two approaches.

The Credit-Card-Services Augmented Divisia Monetary Aggregates

William A. Barnett, Marcelle Chauvet, Danilo Leiva-Leon, and Liting Su
Working Paper University of Kansas Working Paper. No. 201604. Journal of Money, Credit, and Banking, revise and resubmit status.

Abstract

While credit cards provide transactions services, credit cards have never been included in measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities to assets. However, index number theory measures service flows and is based on aggregation theory, not accounting. We derive theory needed to measure the joint services of credit cards and money. We provide and evaluate two such aggregate measures having different objectives. We initially apply to NGDP nowcasting. Both aggregates are being implemented by the Center for Financial Stability, which will provide them to the public monthly, along with Bloomberg Terminals.

Financial Firm Production of Monetary and Credit Card Services: an Aggregation Theoretic Approach

William A. Barnett, and Liting Su
Working Paper Journal of Banking and Finance, submitted. Ref. No. JBF-D-16-01225.

Abstract

A monetary-production model of financial firms is employed to investigate supply-side monetary aggregation, augmented to include credit card transaction services. Financial firms are conceived to produce monetary and credit card transaction services as outputs through financial intermediation. While credit cards provide transactions services, credit cards have never been included into measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities to assets. However, index number theory measures service flows and is based on aggregation theory, not accounting. Barnett, Chauvet, Leiva-Leon, and Su (2016) have derived and applied the relevant aggregation theory applicable to measuring the demand for the joint services of money and credit cards. But because of the existence of required reserves, there is a regulatory wedge between the demand and supply of monetary services. We derive theory needed to measure the supply of the joint services of credit cards and money. The resulting model can be used to investigate the transmission mechanism of monetary policy.

Nowcasting Nominal GDP with the Credit-Card Augmented Divisia Monetary Aggregates

William A. Barnett, Marcelle Chauvet, Danilo Leiva-Leon, and Liting Su
Working Paper Johns Hopkins University Studies in Applied Economics (SAE Working Paper No. 59).

Abstract

While credit cards provide transactions services, as do currency and demand deposits, credit cards have never been included in measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities, such as credit card balances, to assets, such as money. However, economic aggregation theory and index number theory measure service flows and are based on microeconomic theory, not accounting. We derive theory needed to measure the joint services of credit cards and money. Carried forward rotating balances are not included in the current period weakly separable block, since they were used for transactions services in prior periods. The theory is developed for the representative consumer, who pays interest for the services of credit cards during the period used for transactions. This interest rate is reported by the Federal Reserve as the average over all credit card accounts, including those not paying interest. Based on our derived theory, we propose an empirical measurement of the joint services of credit cards and money. These new Divisia monetary aggregates are widely relevant to macroeconomic research. We evaluate the ability of our money aggregate measures to nowcast nominal GDP. This is currently topical, given proposals for nominal GDP targeting, which require monthly measures of nominal GDP. The nowcasts are estimated using only real time information, as available for policy makers at the time predictions are made. We use a multivariate state space model that takes into account asynchronous information inflow, as proposed in Barnett, Chauvet, and Leiva-Leon (2016). The model considers real time information that arrives at different frequencies and asynchronously, in addition to mixed frequencies, missing data, and ragged edges. The results indicate that the proposed parsimonious model, containing information on real economic activity, inflation, and the new augmented Divisia monetary aggregates, produces the most accurate real time nowcasts of nominal GDP growth. In particular, we find that inclusion of the new aggregate in our nowcasting model yields substantially smaller mean squared errors than inclusion of the previous Divisia monetary aggregates.

The Joint Services of Money and Credit

William A. Barnett and Liting Su
Working Paper Johns Hopkins University Studies in Applied Economics (SAE Working Paper No. 21).

Abstract

While credit cards provide transaction services, as do currency and demand deposits, credit cards have never been included in measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities, such as credit card balances, to assets, such as money. But economic aggregation theory and index number theory are based on microeconomic theory, not accounting, and measure service flows. We derive theory needed to measure the joint services of credit cards and money. The underlying assumption is that credit card services are not weakly separable from the services of monetary assets. Carried forward rotating balances are not included, since they were used for transactions services in prior periods. The theory is developed for the representative consumer, who pays interest for the services of credit cards during the period used for transactions. In the transmission mechanism of central bank policy, our results raise potentially fundamental questions about the traditional dichotomy between money and some forms of short term credit, such as checkable lines of credit. We do not explore those deeper issues in this paper, which focuses on measurement.

Teaching History

  • 2015.05 2015.01

    Econ 526 Introduction to Econometrics

    Independently leading an undergraduate course, setting course syllabus, teaching materials, homework, and exams all by myself, meeting with my class 3 times per week.

  • 2014.12 2014.08

    Econ 801 Microeconomics and Econ 800 Optimization Techniques

    Teaching assistant leading discussion class once per week for core courses offered to 1st year Ph.D. students.

  • 2014.05 2014.01

    Econ 142 Principles of Microeconomics

    Teaching assistant leading 3 classes per week.

  • 2013.12 2013.08

    Econ 144 Principles of Macroeconomics

    Teaching assistant leading 3 classes per week.

  • 2013.05 2013.01

    Econ 144 Principles of Macroeconomics

    Teaching assistant leading 3 classes per week.

  • 2012.12 2012.08

    Econ 144 Principles of Macroeconomics

    Teaching assistant leading 3 classes per week.