The Demand for M3 in the Euro Area

No abstract.

Unemployment and Inflation Persistence in Spain: Are There Phillips Trade-Offs?

This paper studies the dynamic behavior of inflation and unemployment in Spain during the period 1964?1997. In particular, we analyze the implications of high persistence in both unemployment and inflation dynamics for inference regarding the size of Phillips trade-offs and sacrifice ratios in the Spanish economy, in response to a demand shock. To do so we use a Stuctural VAR approach with several identification outlines which give rise to alternative interpretations of the joint unemployment-inflation dynamics. When using a bivariate VAR we cannot reject the existence of a permanent output loss of one-half of one percentage point for each percentage point of permanent disinflation. However, when the VAR is augmented with a third variable, in order to disentangle monetary from non-monetary shocks within the demand class, the evidence favours a lower and marginally permanent trade-off with an output loss of about one-fourth of one percentage point.Publicad

The demand for M3 in the euro area

In this paper, an empirically stable money demand model for M3 in the euro area is constructed. Starting with a multivariate system, three cointegrating relationships with economic content are found: (i) the spread between the long- and the short-term nominal interest rates, (ii) the long-term real interest rate, and (iii) a long-run demand for broad money M3. There is evidence that the determinants of M3 money demand are weakly exogenous with respect to the long-run parameters. Hence, following a general-to-specific modelling approach, a parsimonious conditional error-correction model for M3 money demand is derived which can be interpreted economically. For the conditional model, long-and short-run parameter stability is extensively tested and not rejected. Insights into the dynamics of money demand are gained by means of SVAR techniques exploring the impulse response functions of the cointegrated multivariate system. JEL Classification: C22, C32, E41cointegration, error-correction model, euro area, impulse response analysis, Money demand

Using quality models in software package selection

The growing importance of commercial off-the-shelf software packages requires adapting some software engineering practices, such as requirements elicitation and testing, to this emergent framework. Also, some specific new activities arise, among which selection of software packages plays a prominent role. All the methodologies that have been proposed recently for choosing software packages compare user requirements with the packages' capabilities. There are different types of requirements, such as managerial, political, and, of course, quality requirements. Quality requirements are often difficult to check. This is partly due to their nature, but there is another reason that can be mitigated, namely the lack of structured and widespread descriptions of package domains (that is, categories of software packages such as ERP systems, graphical or data structure libraries, and so on). This absence hampers the accurate description of software packages and the precise statement of quality requirements, and consequently overall package selection and confidence in the result of the process. Our methodology for building structured quality models helps solve this drawback.Peer ReviewedPostprint (published version

Classical simulations of Abelian-group normalizer circuits with intermediate measurements

Quantum normalizer circuits were recently introduced as generalizations of Clifford circuits [arXiv:1201.4867]: a normalizer circuit over a finite Abelian group $G$ is composed of the quantum Fourier transform (QFT) over G, together with gates which compute quadratic functions and automorphisms. In [arXiv:1201.4867] it was shown that every normalizer circuit can be simulated efficiently classically. This result provides a nontrivial example of a family of quantum circuits that cannot yield exponential speed-ups in spite of usage of the QFT, the latter being a central quantum algorithmic primitive. Here we extend the aforementioned result in several ways. Most importantly, we show that normalizer circuits supplemented with intermediate measurements can also be simulated efficiently classically, even when the computation proceeds adaptively. This yields a generalization of the Gottesman-Knill theorem (valid for n-qubit Clifford operations [quant-ph/9705052, quant-ph/9807006] to quantum circuits described by arbitrary finite Abelian groups. Moreover, our simulations are twofold: we present efficient classical algorithms to sample the measurement probability distribution of any adaptive-normalizer computation, as well as to compute the amplitudes of the state vector in every step of it. Finally we develop a generalization of the stabilizer formalism [quant-ph/9705052, quant-ph/9807006] relative to arbitrary finite Abelian groups: for example we characterize how to update stabilizers under generalized Pauli measurements and provide a normal form of the amplitudes of generalized stabilizer states using quadratic functions and subgroup cosets.Comment: 26 pages+appendices. Title has changed in this second version. To appear in Quantum Information and Computation, Vol.14 No.3&4, 201

The information content of M3 for future inflation

The information content of broad money M3 for future GDP inflation in the euro area is investigated from a number of perspectives. Firstly, tests that money does not Granger-cause prices are conducted within a cointegrated VAR system comprising real M3 holdings, real GDP, inflation and short- and long-term interest rates. Secondly, this empirical framework is extended to investigate the claim that - in the context of an extended P-star model - the real money gap has substantial predictive power for future inflation. And thirdly, the P-star type of model developed is compared with an existing rival model of inflation in the euro area where no explicit role is given to monetary developments. Our empirical results confirm that a significant positive association exists between the real money gap and future inflation up to five to six quarters ahead, reaching a maximum at the three-to-four quarter horizon. It is also shown that, although the extended P-star model outperforms the competing model in terms of out-of-sample forecast accuracy (as measured by the root mean square forecast errors) at horizons above two quarters, the hypothesis that no useful information is contained in rival evidence can be rejected at standard confidence levels. JEL Classification: C32, C50, E30, E40euro area, inflation, leading indicators, M3, monetary aggregates, P-star

What effects is EMU having on the euro area and its member countries? An overview

This paper addresses the effects of the European Economic and Monetary Union (EMU) since the introduction of the euro -- on economic and financial structures, institutions and performance. What type of changes is the euro fostering? What forces is it setting in motion that were not there before? Six years after the launch of the euro, was an appropriate time to start taking stock of these effects. For this purpose, in June 2005, the ECB held a workshop on “What effects is EMU having on the euro area and its member countries?” The workshop was organised in five areas: 1. trade integration, 2. business cycles synchronisation, economic specialisation and risk sharing, 3. financial integration, 4. structural reforms in product and labour markets, and 5. inflation persistence. This paper sets the workshop in the context of the current debate on the effects of EMU and brings together several of the issues raised by the leading presentations: i.e., this paper serves as an overview. Overall, the effects of the euro observed are beneficial. However, progress has been uneven in the above areas. Many potential concerns preceding the launch of the euro have been dispelled. Moreover, it will take more time for the full effects of the euro to unravel. JEL Classification: E42, F13, F33, F42Economic and Monetary Integration and EMU, Optimum Currency Area