The relationship of True Money Supply to the standard and alternative economic indicatators in the Czech republic

The goal of this thesis is to test, whether the Austrian school monetary aggregate - True money supply (TMS) reaches a better mutual relationship with national income and inflation than the aggregate M2 used by the mainstream economics. The purpose of this test is the fact that according to the austrian economists TMS is supposed to be based on a coherent theoretical background, whereas M2 was created by using statistical methods. In order to reach a coherent comparison, monetary aggregates were tested not only with the standard aggregates -- GDP and CPI representing inflation, but also with the alternative aggregates coming from the theory of the Austrian school -- Gross Domestic Output and Composite Price Index. These aggregates were analyzed by the correlation, regressive and vector autoregressive analysis (VAR models). The results did not show a better relationship between TMS and the remaining macro-aggregates. However, the theoretical background of a indicator is crucial for the austrian economists, that is why this test does not prove any impropriety of the indicator but only it's worse practical utility