The relationship between M3 and consumer price index in the Czech Republic

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Libena Cernohorska


This paper aimed at analysing the influence of monetary aggregate M3 on consumer price index (CPI) in the Czech Republic. Cointegrating this selected indicator M3 is demonstrated in relation to the development of CPI using the Engle – Granger cointegration test. These tests are applied to selected statistical data from the years 2003 to 2016. After using the Akaike criteria for all-time series, we analysed a unit root using the Dickey–Fuller test. If the time series are non-stacionary, testing is then continued with the Engle–Granger test to detect cointegration relations. Based on these tests, it is found that at a significance level of 0.05, a cointegration relationship between M3 and CPI in the Czech Republic does not exist. Conclusions resulting from the verification of the hypotheses are supported with graphical visualisation of data from which it is apparent that these hypotheses can be rejected. Keywords: M3; Czech Republic ; CPI ; Akaike criteria


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CERNOHORSKA, Libena. The relationship between M3 and consumer price index in the Czech Republic. New Trends and Issues Proceedings on Humanities and Social Sciences, [S.l.], v. 4, n. 10, p. 226-236, jan. 2018. ISSN 2547-8818. Available at: <>. Date accessed: 22 jan. 2018. doi: