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A banking explanation of the US velocity of money: 1919-2004
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SYSNO ASEP 0342817 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title A banking explanation of the US velocity of money: 1919-2004 Author(s) Benk, S. (HU)
Gillman, M. (GB)
Kejak, Michal (NHU-C) RIDSource Title Journal of Economic Dynamics & Control. - : Elsevier - ISSN 0165-1889
Roč. 34, č. 4 (2010), s. 765-779Number of pages 15 s. Language eng - English Country NL - Netherlands Keywords volatility ; business cycle ; credit shocks Subject RIV AH - Economics CEZ MSM0021620846 - NHU-C UT WOS 000277057900013 DOI 10.1016/j.jedc.2009.11.005 Annotation 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. Workplace Economics Institute - CERGE Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2011
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