Nevertheless, as long as money demand relationships are reasonably stable – as has been the case in Europe in contrast to the US – information from monetary developments should provide robust indications of medium-term price pressures. Paraphrasing an expression of Paul Samuelson, we were given two eyes: one to watch money and credit aggregates and one to watch everything else.
One reason that early-stage financing is lower in Europe is that national financial markets are fragmented: funding highrisk, high-reward technologies is much more effective when there is a larger stream of new projects to compensate for the fact that the majority of them will fail.