Calculate the percentage change for M1 and M2 monetary aggregates.
M1 Data (Narrow Money)
Enter value in billions/trillions
M2 Data (Broad Money)
Enter value in billions/trillions
Calculation Results
M1 Growth Rate:—
M1 Absolute Change:—
M2 Growth Rate:—
M2 Absolute Change:—
M2/M1 Ratio (Liquidity Check):—
function calculateMoneySupplyGrowth() {
// 1. Get DOM elements
var m1PrevInput = document.getElementById('m1_prev');
var m1CurrInput = document.getElementById('m1_curr');
var m2PrevInput = document.getElementById('m2_prev');
var m2CurrInput = document.getElementById('m2_curr');
var resultDisplay = document.getElementById('ms_result_display');
// 2. Parse values
var m1Prev = parseFloat(m1PrevInput.value);
var m1Curr = parseFloat(m1CurrInput.value);
var m2Prev = parseFloat(m2PrevInput.value);
var m2Curr = parseFloat(m2CurrInput.value);
// 3. Validation
if (isNaN(m1Prev) || isNaN(m1Curr) || isNaN(m2Prev) || isNaN(m2Curr)) {
alert("Please enter valid numerical values for all fields.");
return;
}
if (m1Prev === 0 || m2Prev === 0) {
alert("Previous period values cannot be zero when calculating growth rates.");
return;
}
// 4. Calculations
var m1Diff = m1Curr – m1Prev;
var m1Rate = (m1Diff / m1Prev) * 100;
var m2Diff = m2Curr – m2Prev;
var m2Rate = (m2Diff / m2Prev) * 100;
var ratio = m2Curr / m1Curr;
// 5. Update UI
resultDisplay.style.display = 'block';
// Helper function to format percentage
function formatPercent(val) {
var sign = val > 0 ? "+" : "";
var cssClass = val >= 0 ? "ms-result-positive" : "ms-result-negative";
return '' + sign + val.toFixed(2) + '%';
}
// Helper function to format number
function formatNum(val) {
var sign = val > 0 ? "+" : "";
return sign + val.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('m1_growth_result').innerHTML = formatPercent(m1Rate);
document.getElementById('m1_abs_result').innerHTML = formatNum(m1Diff);
document.getElementById('m2_growth_result').innerHTML = formatPercent(m2Rate);
document.getElementById('m2_abs_result').innerHTML = formatNum(m2Diff);
document.getElementById('liquidity_ratio').innerText = ratio.toFixed(2) + "x";
}
How to Calculate Growth Rate of M1 and M2 Money Supply
Tracking the growth rate of the money supply is a fundamental aspect of macroeconomic analysis. By monitoring the changes in M1 and M2, economists, investors, and policymakers can gauge the liquidity in the economy, potential inflationary pressures, and the stance of monetary policy.
Quick Definitions:
M1 (Narrow Money): Includes the most liquid assets, such as cash in circulation, traveler's checks, and demand deposits (checking accounts).
M2 (Broad Money): Includes everything in M1 plus "near money," such as savings accounts, money market securities, and time deposits (CDs).
The Growth Rate Formula
Calculating the growth rate for money supply aggregates follows the standard percentage change formula used in finance and statistics. Whether you are analyzing Month-over-Month (MoM) or Year-over-Year (YoY) data, the logic remains the same.
The formula for Money Supply Growth Rate ($G$) is:
G = ((Current Period Value – Previous Period Value) / Previous Period Value) * 100
Example Calculation
Let's assume you are analyzing the M2 money supply for the United States based on Federal Reserve data (measured in billions):
Step 2: Divide by the previous value.
700 / 20,500 ≈ 0.0341
Step 3: Convert to percentage.
0.0341 * 100 = 3.41%
This indicates that the M2 money supply expanded by 3.41% over the observed period.
Why Monitor M1 and M2 Growth?
1. Inflation Indicators
The Quantity Theory of Money suggests that if the money supply grows faster than real economic output (GDP), inflation will likely follow. Historically, rapid expansions in M2 have been leading indicators for rising consumer prices.
2. Economic Activity
A growing money supply often signals that the central bank is injecting liquidity to stimulate the economy, lowering interest rates and encouraging borrowing. Conversely, a contracting or slowing money supply (negative growth rate) suggests tightening monetary policy, which is often used to cool down an overheating economy.
3. M1 vs. M2 Divergence
Sometimes M1 will grow much faster than M2. This usually happens during periods of financial uncertainty when individuals and businesses liquidate long-term assets (moving money from M2-only categories like CDs) into cash or checking accounts (M1) for safety and immediate access.
Data Sources
To use the calculator above effectively, you need accurate data. The primary source for United States money supply data is the Federal Reserve Economic Data (FRED) database maintained by the St. Louis Fed. Reports are typically released weekly and monthly.