@techreport{NBERw8025,
 title = "Money and Inflation in the Euro Area: A Case for Monetary Indicators?",
 author = "Stefan Gerlach and Lars E.O. Svensson",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "8025",
 year = "2000",
 month = "December",
 URL = "http://www.nber.org/papers/w8025",
 abstract = {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.},
}