Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/17732 
Authors: 
Year of Publication: 
2001
Series/Report no.: 
Kiel Working Paper No. 1037
Publisher: 
Kiel Institute of World Economics (IfW), Kiel
Abstract: 
This paper reviews the usefulness of monetary conditions in the euro area as leading indicators for aggregate demand conditions. Monetary conditions are measured with the MCI concept proposed by the Bank of Canada, and with the yield spread. A central result is that causality runs in both ways between monetary and aggregate demand conditions. The endogeneity of monetary conditions raises important implications for its role as a predictor of aggregate demand. It is shown that the information content of monetary conditions depends on the source of business cycle fluctuations and on the response of the central bank to those fluctuations.
Subjects: 
Monetary Conditions
MCI
Output Gap
JEL: 
E32
E52
E37
Document Type: 
Working Paper

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