M3 as an economic indicator in the Eurozone

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Libena Cernohorska
Darina Kubicova


The aim of this paper is to analyse the influence of monetary aggregate on economic indicators in the Eurozone. Cointegration, this selected indicator monetary aggregate M3, is demonstrated in relation to the development of Harmonised Index of Consumer Prices (HICP), gross domestic product (GDP), commodity prices and credits using Granger causality. Quarterly data between the years 1996 and 2017 are included in the analysis. Because we did not confirm the long-term relationship of the selected indicators, we continue with Granger causality. We found causal relationships between monetary aggregate M3 and GDP, HICP, commodity prices and credits. In all cases, the selected indicators have the opposite effect in Granger causality too. We also cannot definitely evaluate the effectiveness of the European Central Bank’s monetary policy and cannot confirm the use of monetary aggregate M3 as an economic indicator of future economic development in the Eurozone.
Keywords: Eurozone, GDP, Granger causality, HICP, M3, monetary aggregate.


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Cernohorska, L., & Kubicova, D. (2018). M3 as an economic indicator in the Eurozone. New Trends and Issues Proceedings on Humanities and Social Sciences, 5(2), 57–66. https://doi.org/10.18844/prosoc.v5i2.3654 (Original work published September 11, 2018)