We use a mean-adjusted Bayesian VAR model as an out-of-sample forecasting tool to test whether money growth Granger-causes inflation in the euro area. Based on data from 1970 to 2006 and forecasting horizons of up to 12 quarters, there is surprisingly strong evidence that including money improves forecasting accuracy. The results are very robust with regard… (More)
The natural interest rate is of great relevance to central banks, but it is difficult to measure. We show that in a standard microfounded monetary model, the natural interest rate co-moves with a transformation of money demand that can be computed from actual data. The optimizing central bank that cannot observe the natural interest rate takes advantage of… (More)
This text may be downloaded only for personal research purposes. Additional reproduction for other purposes, whether in hard copies or electronically, requires the consent of the author(s), editor(s). If cited or quoted, reference should be made to the full name of the author(s), editor(s), the title, the working paper, or other series, the year and the… (More)
Ten papers have been selected from the Journal and its predecessors for this purpose, one from each decade of NIST's existence. The papers have been selected to reflect the breadth and excellence of the work carried out at NIST during its first century. For further information, see the Message From the Chief Editor on p. iii.