A Causal Relationship and Macroeconomic Activity: Empirical Results From European Union

This study investigates the relationship among macroeconomic variables using quarterly data for European Union covering the period from 1970 I to 2000 IV. The purpose of this study is to estimate the dynamic interrelation among macroeconomic variables such as money, gross domestic product, interest rates, level of price and exchange rates. For the empirical analysis of this investigation, we employ the Johansen multivariate cointegration technique as well as Granger causality tests. The empirical results provide evidence for the existence of important causality relations between variables that describe macroeconomic activity.