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Euro area money demand and international portfolio allocation: A contribution to assessing risks to price stability

Listed author(s):
  • De Santis, Roberto A.
  • Favero, Carlo A.
  • Roffia, Barbara

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0261560612000897
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 377-404

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Handle: RePEc:eee:jimfin:v:32:y:2013:i:c:p:377-404
DOI: 10.1016/j.jimonfin.2012.04.012
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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