Monetary Aggregates and Consumer Price Inflation in the Euro Area
Monetary Aggregates and Consumer Price Inflation in the Euro Area

Author(s): Ľudomír Šlahor, Peter Stanko, Mária Barteková
Subject(s): Economic policy, Political economy, Evaluation research, EU-Accession / EU-DEvelopment
Published by: Masarykova univerzita nakladatelství
Keywords: monetary aggregates; monetary policy; leading indicators; inflation;
Summary/Abstract: In this paper we study the relationships between monetary aggregates M1, M2 and M3 and inflation (represented by HICP) using statistical analysis. We analyse the extent of correlations between money growth (M1, M2, and M3) and inflation at different frequencies and different points in time as well as the time-lag relationships between these variables. The analysis serves to verify the quantity theory of money for a transmission mechanism within the maximum period of 6 months. Our main focus is on correlations in the time interval from January 2010 until December 2014 which allows a meaningful and representative analysis.

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