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Does global liquidity help to forecast U.S. inflation?


Journal of Money, Credit, and Banking



Authors / Editors

D'Agostino A;Surico P


Publication Year



We construct a measure of global liquidity using the growth rates of broad money for the G7 economies. Global liquidity produces forecasts of U.S. inflation that are significantly more accurate than the forecasts based on U.S. money growth, Phillips curve, and autoregressive and moving average models. The marginal predictive power of global liquidity is strong at 3-year horizons. Results are robust to alternative measures of inflation.


Predictive accuracy; Global liquidity; Money growth; Inflation

Available on ECCH


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