Money growth in the euro area has exceeded its target since 2001. Likewise, recent empirical studies did not find … evidence in favour of a stable long run money demand function. The equation appears to be increasingly unstable if more recent … data are used. If the link between money balances and the macroeconomy is fragile, the rationale of monetary aggregates in …

Monetary growth in the euro area has exceeded its target since several years. At the same time, the money demand … function seems to be increasingly unstable if more recent data are used. If the link between money balances and the … of money demand. This presumption is explored by means of a cointegration analysis. To separate income from wealth …

This paper explores the stability of the relation between money demand for M3 and inflation in the euro area by … prices are allowed to enter the long run relationship. By restricting the cointegrating space, equations for money and … inflation are identified. The results indicate that the equilibrium evolution of M3 is still in line with money demand. In the …