EconPapers    
Economics at your fingertips  
 

Money and velocity during financial crises: From the great depression to the great recession

Richard G. Anderson, Michael Bordo and John Duca

Journal of Economic Dynamics and Control, 2017, vol. 81, issue C, 32-49

Abstract: This study models the demand for a broad monetary aggregate (M2) from the Great Depression through the Great Recession. Key to the model is the interaction between a measure of time-variation in economic agents’ perceived financial risk and an index of the cost of portfolio adjustment. The finding of a useful money demand relationship suggests that skepticism regarding the indicator role of a broad, liquid money aggregate as a policy guide may be exaggerated. Further, our model provides some guidance for policymakers who face the challenge of unwinding large balance sheets as risk premia return to normal and velocity adjusts.

Keywords: Money demand; Financial crises; Monetary policy; Liquidity; Financial innovation (search for similar items in EconPapers)
JEL-codes: E41 E50 G11 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188917300738
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Money and Velocity During Financial Crises: From the Great Depression to the Great Recession (2016) Downloads
Working Paper: Money and Velocity During Financial Crises: From the Great Depression to the Great Recession (2016) Downloads
Working Paper: Money and velocity during financial crises: from the Great Depression to the Great Recession (2015) Downloads
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:eee:dyncon:v:81:y:2017:i:c:p:32-49

DOI: 10.1016/j.jedc.2017.03.014

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-23
Handle: RePEc:eee:dyncon:v:81:y:2017:i:c:p:32-49