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The predictive power of real M1 for real economic activity in the euro area

Author

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  • Musso, Alberto

Abstract

The evidence presented in this box suggests that the leading and pro-cyclical properties of real M1 for real GDP remain a robust stylised fact for the euro area. Moreover, the box documents that these properties seem to reflect the information content of narrow money, beyond the influence of interest rates. Finally, the box presents model-based evidence indicating that despite the recent deceleration, recent real M1 developments do not point to risks of a recession in the euro area up to early 2020. JEL Classification: E32, E44, E47, E51

Suggested Citation

  • Musso, Alberto, 2019. "The predictive power of real M1 for real economic activity in the euro area," Economic Bulletin Boxes, European Central Bank, vol. 3.
    • Handle: RePEc:ecb:ecbbox:2019:0003:4
    Note: 93259
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2019/html/ecb.ebbox201903_04~eba5677b27.en.html
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    Citations

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    Cited by:

    1. Matteo Farnè & Angela Montanari, 2022. "A Bootstrap Method to Test Granger-Causality in the Frequency Domain," Computational Economics, Springer;Society for Computational Economics, vol. 59(3), pages 935-966, March.
    2. Guillochon, Justine & Le Roux, Julien, 2023. "Unobserved components model(s): output gaps and financial cycles," Working Paper Series 2832, European Central Bank.

    More about this item

    Keywords

    Real M1; recession risks;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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