Euro Area Money Demand and International Portfolio Allocation: A Contribution to Assessing Risks to Price Stability

Carlo Favero (), Roberto De Santis () and Barbara Roffia

No 8957, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper argues that a stable broad money demand for the euro area over the period 1980-2011 can be obtained by modelling cross border international portfolio allocation. As a consequence, model-based excess liquidity measures, namely the difference between actual M3 growth (net of the inflation objective) and the expected money demand trend dynamics, can be useful to predict HICP inflation.

Keywords: Euro area money demand; Inflation forecasts; Monetary policy; Portfolio allocation (search for similar items in EconPapers)
JEL-codes: E4 E44 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-cba, nep-eec, nep-for, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Euro area money demand and international portfolio allocation: A contribution to assessing risks to price stability (2013)
Working Paper: Euro Area Money Demand and International Portfolio Allocation: A Contribution to Assessing Risks to Price Stability (2012)
Working Paper: Euro area money demand and international portfolio allocation: a contribution to assessing risks to price stability (2008)
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