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Money as an Indicator in the Euro Zone

  • Jan Gottschalk
  • Felipe Martinez Rico
  • Willem Van Zandweghe

This paper attempts to evaluate the information content of money for the forecast of inflation, output, investment and consumption in the euro zone. It considers M1 and M3; a number of modifications to these aggregates is also proposed to enhance their forecast performance. The evaluation employs Granger-causality tests, stability tests and historical out-of-sample forecasts. On balance the information content of money appears to be rather limited. An improvement of the forecast is confined to the real variables and to the second half of the nineties. For the first half of the nineties the forecast performance of money is generally poor.

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File URL: https://www.ifw-members.ifw-kiel.de/publications/money-as-an-indicator-in-the-euro-zone/kap984.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 984.

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Length: 35 pages
Date of creation: May 2000
Date of revision:
Handle: RePEc:kie:kieliw:984
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  2. Alberto Cabrero & Juan L. Escrivá & Emilio Muñoz & Juan Peñalosa, 1998. "The Controllability of a Monetary Aggregate in EMU," Banco de Espa�a Working Papers 9817, Banco de Espa�a.
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