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A banking explanation of the US velocity of money: 1919-2004
- 1.0342817 - NHU-C 2011 RIV NL eng J - Journal Article
Benk, S. - Gillman, M. - Kejak, Michal
A banking explanation of the US velocity of money: 1919-2004.
Journal of Economic Dynamics & Control. Roč. 34, č. 4 (2010), s. 765-779. ISSN 0165-1889. E-ISSN 1879-1743
Institutional research plan: CEZ:MSM0021620846
Keywords : volatility * business cycle * credit shocks
Subject RIV: AH - Economics
Impact factor: 1.117, year: 2010
The paper shows that US GDP velocity of M1 money has exhibited long cycles around a 1.25% per year upward trend, during the 1919-2004 period. It explains the velocity cycles through shocks constructed from a DSGE model and annual time series data (Ingram et al., 1994). Model velocity is stable along the balanced growth path, which features endogenous growth and decentralized banking that produces exchange credit. Positive shocks to credit productivity and money supply increase velocity, as money demand falls, while a positive goods productivity shock raises temporary output and velocity. The paper explains such velocity volatility at both business cycle and long run frequencies.
Permanent Link: http://hdl.handle.net/11104/0185444
Number of the records: 1