Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153190
Authors: 
Reynard, Samuel
Year of Publication: 
2007
Series/Report no.: 
ECB Working Paper 756
Abstract: 
This paper presents a systematic empirical relationship between money and subsequent prices and output, using US, euro area and Swiss data since the 1960-70s. Monetary developments, unlike interest rate stance measures, are shown to provide qualitative and quantitative information on subsequent inflation. The usefulness of monetary analysis is contrasted to weaknesses in modeling monetary policy and inflation with respectively short-term interest rates and real activity measures. The analysis sheds light on the recent change in inflation volatility and persistence as well as on the Phillips curve flattening, and reveals drawbacks in pursuing a low inflation target without considering monetary aggregates.
Subjects: 
Equilibrium interest rate
inflation
monetary aggregates
monetary policy
Output
Taylor rule
JEL: 
E52
E58
E41
E3
Document Type: 
Working Paper

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