It was a nice try when Jürgen Stark, ECB executive board member, explained in a recent article why the ECB is an international precusor when analyzing monetary aggregates in monetary policy practice. Well it seemd to be a pretty poor attempt.
Asset price inflation, schocks to money, the link between lending to the private sector and economic activity, are all prudential arguments to glance at credit/money aggregates.
Stark instead emphasizes that there is one universal economic cointegration in economics, i.e. the relationship between money and (goods) inflation. However, he simultanously admits that structural breaks and varying transmission mechanism changed this link and make evalutations of current monetary-policy models essentiel. So what do you really want say, Mr. Stark? Is there a link or is there not a link? Is there a need for including money in monetary analysis although the link between money and goods inflation is apparently macarated?
Mr. Stark failed to make a (reasonable) point in favour of monetary aggregates. This fact is distressing all the more since he is an influencial member of the ECB decision-making body. To me, Mr. Stark's statement rather weakens the confidence in ECB's analytiv capacity!
