OeNB Bulletin 2026/2: Detecting inflation regime shifts in the euro area: the role of money growth

Jannik Pointecker () and Thomas Zörner ()
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Jannik Pointecker: University of Vienna
Thomas Zörner: Oesterreichische Nationalbank (OeNB)

OeNB Bulletin, 2026, issue 2026/2, 23

Abstract: This study employs an adjusted money growth indicator to identify inflation regime shifts in the euro area. A two-regime LSTAR model reveals that when adjusted M3 growth surpasses 5%, a high-inflation regime typically follows after about ten months. This regime is marked by persistent dynamics and a higher average inflation rate. The inflation surge from early 2021 to late 2022 aligns with periods of elevated adjusted money growth, underscoring the value of such indicators as complementary tools for tracking and anticipating inflation regime changes.

Keywords: Money growth; inflation regimes; non-linear model; euro area (search for similar items in EconPapers)
JEL-codes: C32 E31 E51 (search for similar items in EconPapers)
Date: 2026
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