| Sumario: | The writers examine whether monetary aggregates could play a role as either intermediate targets or indicators of the single monetary policy of the European Central Bank (ECB). They consider four monetary aggregates as candidate intermediate target variables or indicators of monetary policy—M1, M3H, MB, and MR. They estimate the money demand functions for the European Economic and Monetary Union and test their stability. They find that M3H, in particular, can play a role in both a monetary and an inflation targeting strategy. They contend that if the ECB chooses an inflation targeting strategy, in addition to M3H, MR and M1 may well serve as important indicators, together with a number of other financial and real variables.
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