This paper studies the importance of money for inflation in the euro area. An inflation …

inflation, extending the inquiry conducted in Tallman and Chandra (1996). First, we investigate whether perfect knowledge of the … future values of financial aggregates helps improve significantly the forecasting accuracy of output and inflation in a … data. We find only one instance in which an aggregate helps explain the variation in either real output growth or inflation …

This paper implements recursive techniques to estimate the equilibrium level of M2 velocity and to forecast inflation …-time forecasts of inflation and evaluate the performance of the forecasts obtained from the alternative models. We find that while a … P* model assuming a constant equilibrium velocity does not provide accurate inflation forecasts in the 1990s, a model …