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Does Money Include Information for Prices in the Euro Area? / Enthält Geld Informationen für die Preisentwicklung im Eurowährungsgebiet?

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  • Reimers Hans-Eggert

    (Hochschule Wismar, Fachhochschule für Technik, Wirtschaft und Gestaltung, Philipp-Müller-Straße, PF 1210, D-23952 Wismar. Tel.: ++49/+38 41/ 75 3601, Fax: ++49/+38 41/75 33 83)

Abstract

Summary In this paper, the P-star framework is mainly used to examine the importance of money for future price movements in the euro area. Constructing the equilibrium price level, simple-sum M3 and different Divisia M3 aggregates are considered. In addition, nominal money changes are investigated in inflation equations. Adapting an in-sample analysis, Divisia aggregates are important for HICP development and to some extent for GDP deflator movement. The out-of-sample forecasting exercise presents evidence that simple-sum M3 includes more information for the HICP, whereas one of the Divisia aggregates helps to predict the future GDP deflator.

Suggested Citation

  • Reimers Hans-Eggert, 2003. "Does Money Include Information for Prices in the Euro Area? / Enthält Geld Informationen für die Preisentwicklung im Eurowährungsgebiet?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(5), pages 581-602, October.
    • Handle: RePEc:jns:jbstat:v:223:y:2003:i:5:p:581-602
    DOI: 10.1515/jbnst-2003-0506
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    References listed on IDEAS

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    Cited by:

    1. Czudaj, Robert, 2011. "P-star in times of crisis - Forecasting inflation for the euro area," Economic Systems, Elsevier, vol. 35(3), pages 390-407, September.
    2. Aurelijus Dabušinskas, 2005. "Money and Prices in Estonia," Bank of Estonia Working Papers 2005-07, Bank of Estonia, revised 10 Nov 2005.
    3. Livio Stracca, 2004. "Does Liquidity Matter? Properties of a Divisia Monetary Aggregate in the Euro Area," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(3), pages 309-331, July.

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