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dc.contributor.authorDreger, Christianen_US
dc.contributor.authorWolters, Jürgenen_US
dc.date.accessioned2011-08-30en_US
dc.date.accessioned2011-09-09T13:12:27Z-
dc.date.available2011-09-09T13:12:27Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/49454-
dc.description.abstractThis paper examines the forecasting performance of a broad monetary aggregate (M3) in predicting euro area inflation. Excess liquidity is measured as the difference between the actual money stock and its fundamental value, the latter determined by a money demand function. The out-of sample forecasting performance is compared to widely used alternatives, such as the term structure of interest rates. The results indicate that the evolution of M3 is still in line with money demand even in the period of the financial and economic crisis. Monetary indicators are useful to predict inflation at the longer horizons, especially if the forecasting equations are based on measures of excess liquidity. Due to the stable link between money and inflation, central banks should implement exit strategies from the current policy path, as soon as the financial conditions are expected to return to normality.en_US
dc.language.isoengen_US
dc.publisherDeutsches Institut für Wirtschaftsforschung (DIW) Berlinen_US
dc.relation.ispartofseriesDiscussion papers // German Institute for Economic Research 1064en_US
dc.subject.jelC22en_US
dc.subject.jelC52en_US
dc.subject.jelE41en_US
dc.subject.ddc330en_US
dc.subject.keywordMoney demanden_US
dc.subject.keywordexcess liquidityen_US
dc.subject.keywordmoney and inflationen_US
dc.subject.stwInflationen_US
dc.subject.stwPrognoseverfahrenen_US
dc.subject.stwGeldnachfrageen_US
dc.subject.stwGeldmengeen_US
dc.subject.stwMonetärer Indikatoren_US
dc.subject.stwEurozoneen_US
dc.titleMoney demand and the role of monetary indicators in forecasting euro area inflationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn667373012en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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DIW-Diskussionspapiere

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