Stability of Velocity in the Group of Seven Countries
AbstractThis paper estimates forecasting models using annual data for the income velocity of money in the G-7 countries. The predictions are conditional upon the realized value of the long-term domestic government bond rate. Such conditional forecasts did not deteriorate over the period 1980-1988 as compared with the earlier postwar period. Velocity of M1 is found to be very interest-elastic in almost all countries; velocity of M2 less so. The specifications (based on Kalman filters and smoothers) point to a non-constant (stochastic) trend in velocity, hence questioning the assumptions required for the cointegration techniques used in other research on the demand for money.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 90/80.
Date of creation: 01 Sep 1990
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- Abdul Qayyum & Faiz Bilquees, 2005.
"P-Star Model: A Leading Indicator of Inflation for Pakistan,"
The Pakistan Development Review,
Pakistan Institute of Development Economics, vol. 44(2), pages 117-129.
- Qayyum, Abdul & Bilquees, Faiz, 2005. "P-Star Model: A Leading Indicator of Inflation for Pakistan," MPRA Paper 2058, University Library of Munich, Germany, revised 2005.
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