Money demand and the role of monetary indicators in forecasting euro area inflation

Christian Dreger and Juergen Wolters

International Journal of Forecasting, 2014, vol. 30, issue 2, 303-312

Abstract: This paper examines the stability of money demand and the forecasting performances of a broad monetary aggregate (M3), excess liquidity and excess inflation in predicting euro area inflation. The out-of sample forecasting performances are compared to a widely used alternative, the spread of interest rates. The results indicate that the evolution of M3 is still in line with money demand, even when observations from the economic and financial crisis are included. Both excess measures and the spread are useful for predicting inflation.

Keywords: Money demand; Excess liquidity; Excess inflation; Inflation forecasts (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016920701300160X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Money Demand and the Role of Monetary Indicators in Forecasting Euro Area Inflation (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfor:v:30:y:2014:i:2:p:303-312

DOI: 10.1016/j.ijforecast.2013.09.008

Access Statistics for this article

International Journal of Forecasting is currently edited by R. J. Hyndman

More articles in International Journal of Forecasting from Elsevier
Bibliographic data for series maintained by Catherine Liu ().