01873cas a2200253 a 4500 AALejournalIMF009767 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451869156 1018-5941 BD-DhAAL BD-DhAAL Osterholm, Par. Does Money Growth Granger-Cause Inflation in the Euro Area? : Evidence from Out-of-Sample Forecasts Using Bayesian VARs / Par Osterholm, Helge Berger. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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 to alternative treatments of priors and sample periods. That said, there is also reason not to overemphasize the role of money. The predictive power of money growth for inflation is substantially lower in more recent sample periods compared to the 1970s and 1980s. This cautions against using money-based inflation models anchored in very long samples for policy advice. Mode of access: Internet Berger, Helge. IMF Working Papers; Working Paper ; No. 2008/053 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/053/001.2008.issue-053-en.xml IMF e-Library