NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Money and Inflation in the Euro Area: A Case for Monetary Indicators?

Stefan Gerlach, Lars E.O. Svensson

NBER Working Paper No. 8025
Issued in December 2000
NBER Program(s):   ME

This paper studies the relationship between inflation, output, money and interest rates in the euro area, using data spanning 1980 2000. The P* model is shown to have considerable empirical support. Thus, the price gap' or, equivalently, the real money gap' (the gap between current real balances and long-run equilibrium real balances), has substantial predictive power for future inflation. The real money gap contains more information about future inflation than the output gap and the Eurosystem's money-growth indicator (the gap between current M3 growth and a reference value). The results suggest that the Eurosystem's money-growth indicator is an inferior indicator of future inflation.

download in pdf format
   (297 K)

email paper

This paper is available as PDF (297 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8025

Published: Gerlach, Stefan and Lars E. O. Svensson. "Money And Inflation In The Euro Area: A Case For Monetary Indicators?," Journal of Monetary Economics, 2003, v50(8,Nov), 1649-1672.

Users who downloaded this paper also downloaded these:
Svensson w7178 Does the P* Model Provide Any Rationale for Monetary Targeting?
Ireland w14098 On the Welfare Cost of Inflation and the Recent Behavior of Money Demand
Brunnermeier, Krishnamurthy, and Gorton Liquidity Mismatch Measurement
Svensson and Woodford w9747 Implementing Optimal Policy through Inflation-Forecast Targeting
Woodford w13325 How Important is Money in the Conduct of Monetary Policy?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us