Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27821
Authors: 
Löchel, Horst
Polleit, Thorsten
Year of Publication: 
2005
Series/Report no.: 
Arbeitsberichte der Hochschule für Bankwirtschaft 61
Abstract: 
One major outcome of the review of the ECB’s “two pillar monetary policy strategy”, which was published on 8 May 2003, has been the de facto downgrading of the hitherto prominent role assigned to the stock of money. According to the authors’ judgement, however, there is a strong theoretical and empirical rationale for the ECB monetary policy to pay close attention to the information content of money in the form of M3. However, the authors argue the ECB should make use of the so-called “price gap” or “real money gap” concept rather than the reference value as the latter runs the risk of giving misleading policy recommendations and compromising the indicator quality of the stock of money. Making use of M3 seems all the more rational as currently no better inflation indicator appears to exist in providing inflation forecasts in the euro area.
Subjects: 
P-star
real money gap
excess liquidity
ECB
JEL: 
E41
E51
E61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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