Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The relationship between monetary indicators and inflation is usually assumed to be linear, implying that looser monetary conditions always signal an increase in inflation. Recently, money growth in the euro area surged while inflation remained comparatively subdued. This seems at variance with linearity. At the same time, stock market uncertainty peaked, suggesting that part of the money growth resulted from portfolio adjustment and was hence non-inflationary. A threshold regression model is employed to verify the claim that the impact of monetary indicators on future inflation varies conditional on stock price volatility. It is shown that there is limited evidence to support this claim. On the other hand, the results indicate that stock market data may contain useful information regarding future inflation,