Admissible monetary aggregates for the euro area

Research output: Contribution to journalArticle


We use the Fleissig and Whitney [Fleissig, A.R., Whitney, G.A., 2003. A new PC-based test for Varian's weak separability conditions. Journal of Business and Economics Statistics 21 (1), 133-144] weak separability test to determine admissible levels of monetary aggregation for the Euro area. We find that the Euro area monetary assets in M2 and M3 are weakly separable and construct admissible Divisia monetary aggregates for these assets. We show that real growth of the admissible Divisia aggregates enters the Euro area IS curve positively and significantly for the period from 1980 to 2005. Out of sample, we show that Divisia M2 and M3 appear to contain useful information for forecasting Euro area inflation. (c) 2008 Elsevier Ltd. All rights reserved.


  • Jane M. Binner
  • Rakesh K. Bissoondeeal
  • Thomas Elger
  • Barry E. Jones
  • Andrew W. Mullineux
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics


  • Divisia aggregates, Euro area, Weak separability tests, IS curve, Forecasting
Original languageEnglish
Pages (from-to)99-114
JournalJournal of International Money and Finance
Issue number1
Publication statusPublished - 2009
Publication categoryResearch