Abstract
This paper explores linkages between the monetary payments mechanism and business activity. We introduce a new measure of the volume of transactions associated with output o utput p roduction (TOP) and analyze the empirical connections between TOP and other macroeconomic variables. The first part of the paper describes the accounting basis of TOP and shows how transactions accounting differs from national income and product accounting. We then show how TOP can be derived from the same basic data as is used to measure GNP. Next, we examine three applications of transactions accounting: (1) the relationships between monetary payments and other measures of business activity, (2) the flow of cash among economic sectors through payments and receipts, and (3) the transactions velocity of money. In each application, we find that TOP fills an important gap. Finally, we observe that TOP provides a bridge that links the productive activities of an economy with its monetary payments mechanism.
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