ONE DIVISIA MONEY FOR EUROPE

In 1992 the EU monetary authorities adopted a 'harmonized' broad money aggregate. The EMI was subsequently established to promote monetary p olicy coordination. This paper considers how broad money aggregates mi ght be used to guide EU monetary policy and whether a 'Euro-Divisia' m onetary index might provide a better guide than a 'Euro-simple-sum' ag gregate. Our findings are based on data from the UK, France and German y. They indicate that 'Euromoney' Granger-causes 'Europrices' and that the EuroDivisia monetary index is a better leading indicator of 'Euro inflation' than the Euro-simple-sum monetary aggregate.