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Does Money Granger Cause Inflation in the Euro Area?
C32 - Time-Series Models
E31 - Price Level; Inflation; Deflation
E41 - Demand for Money
In this paper we re-evaluate the empirical evidence on money-inflation Granger causality for the euro area and, in contrast to Trecroci and Vega (2000), conclude that money does in fact Granger cause inflation. We also show that it takes about a year and a half for changes in money growth to start passing on to inflation and five years for the whole adjustment to take place