Money and velocity during financial crises: from the Great Depression to the Great Recession

Richard Anderson (), Michael Bordo and John Duca

No 1503, Working Papers from Federal Reserve Bank of Dallas

Abstract: This study models the velocity (V2) of broad money (M2) since 1929, covering swings in money [liquidity] demand from changes in uncertainty and risk premia spanning the two major financial crises of the last century: the Great Depression and Great Recession. V2 is notably affected by risk premia, financial innovation, and major banking regulations. Findings suggest that M2 provides guidance during crises and their unwinding, and that the Fed faces the challenge of not only preventing excess reserves from fueling a surge in M2, but also countering a fall in the demand for money as risk premia return to normal amid velocity shifts stemming from financial reform.

Keywords: Money demand; Financial crises; Monetary policy; Liquidity; Financial innovation (search for similar items in EconPapers)
Pages: 57 pages
Date: 2015-05-01
New Economics Papers: this item is included in nep-cba, nep-his and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.dallasfed.org/-/media/documents/research/papers/2015/wp1503.pdf Full text (application/pdf)

Related works:
Journal Article: Money and velocity during financial crises: From the great depression to the great recession (2017)
Working Paper: Money and Velocity During Financial Crises: From the Great Depression to the Great Recession (2016)
Working Paper: Money and Velocity During Financial Crises: From the Great Depression to the Great Recession (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:1503

Ordering information: This working paper can be ordered from

DOI: 10.24149/wp1503

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().