New evidence on income and the velocity of money

Philip Graves ()

MPRA Paper from University Library of Munich, Germany

Abstract: Time series and cross-country empirical results suggest that cash holding as a percentage of income rises, or alternatively that velocity falls, as income increases. Numerous cross-sectional findings at many points in time, in several countries conclude oppositely. It is argued here that the former findings suffer from omitted variable bias by ignoring socio-demographic variables affecting the demand for cash balances. When one incorporates such demand shifters into the analysis the time series and cross-country are seen as consistent with the critically reexamined result that velocity increases with income.

Keywords: Money demand; velocity of money; time series; cross-country; cross-sectional (search for similar items in EconPapers)
JEL-codes: C2 E0 E40 E41 (search for similar items in EconPapers)
Date: 1978-01
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: New Evidence on Income and the Velocity of Money (1978)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19899

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