Abstract

PATEIRO-RODRIGUEZ, Carlos; FREIRE-SEOANE, María Jesús; LOPEZ-BERMUDEZ, Beatriz  and  PATEIRO-LOPEZ, Carlos. Analysis of the trend to the liquidity of monetary aggregate M3 in the eurozone: 1997-2018. El trimestre econ [online]. 2020, vol.87, n.345, pp.171-201.  Epub Dec 09, 2020. ISSN 2448-718X.  https://doi.org/10.20430/ete.v87i345.956.

In the last two decades, the monetary aggregate M3, reference aggregate of the Eurpoean Central Bank (ECB), has experienced a strong tendency towards its accumulation in the most liquid components: currency in circulation and overnight deposits, to the detriment of the modalities of deposits with an agreement maturity, and other less weighting components. Although this behaviour is compatible with a long period of low interest rates, it is important to look for other explanations, complementary and/or alternative, to the strong concentration of money demand in the most liquid components. This drift of the reference aggregate can have consequences on price stability, the ultimate objective of the ECB, while it can be a potential factor in the modification of saving behavior. In this paper, along with the analysis of the evolution of the seven components of M3 1997-2018, we present the results of an empirical work on the stability of the relationship between the demand for money and the macroeconomic variables that determine it. The results show that the strong financial disturbances and uncertainties as a result of the crisis, as well as the unconventional decisions on monetary policy adopted by the ECB have some explanatory capacity of the studied phenomenon.

Keywords : Monetary policy; monetary aggregate; liquidity; unit root; stability.

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