The fight against unemployment has become one of the most important challenges that advanced European countries have faced in the last forty years. Economic literature suggests that the changes in labour market institutions - through the implementation of a set of flexibility measures -...

Recent developments in inflation and M3 velocity in the euro area have raised serious doubts about the reliability of M3 growth as a pillar of the ECB's monetary policy strategy. We develop a very flexible and comprehensive state-space framework for modeling the velocity of circulation. Our...