Open Access Article SciPap-1003
Does the Monetary Aggregate M3 the Affect on the Inflation? A Case Study of the Czech Republic, Switzerland and Israel
by Liběna Černohorská 1,* and Petr Maléř 2

1 Faculty of Economics and Administration, Institute of Economic Sciences, University of Pardubice, Studenská 95, Pardubice 53210, Czechia

2 Faculty of Economics and Administration, Institute of Economic Sciences, University of Pardubice, Studenská 95, Pardubice 53210, Czechia

* Authors to whom correspondence should be addressed.

Abstract: The aim of the paper is to analyse the influence of monetary aggregate M3 on inflation in the Czech Republic, Switzerland and Israel between the years 2000 and 2017. The central banks in selected countries have not been able to fulfill their stated goal of achieving price stability. During the period under review, the selected central banks chose foreign exchange intervention as an instrument of unconventional monetary policy to achieve the set inflation target. The analysis of monetary policy in the selected countries will be determined by the long-term relationships between the M3 monetary aggregate and the inflation. Selected indicators were analyzed on quarterly data in the Czech Republic, Switzerland and Israel using the Engle - Granger cointegration test. We have found, based on the tests performed, that monetary policy in the monitored countries was not quite effective in the years 2000- 2017 because we did not confirm in our empirical analyzes the long-term relationship between the monetary aggregate M3 in relation to inflation.

Keywords: Engle-Granger Test, Foreign Exchange Intervention, Inflation, Monetary Policy, M3

JEL classification:   C32 - Time-Series Models • Dynamic Quantile Regressions • Dynamic Treatment Effect Models • Diffusion Processes • State Space Models,   E47 - Forecasting and Simulation: Models and Applications,   E51 - Money Supply • Credit • Money Multipliers,   O24 - Trade Policy • Factor Movement Policy • Foreign Exchange Policy

SciPap 2019, 27(3), 1003

Received: 10 September 2019 / Accepted: 9 December 2019 / Published: 30 December 2019