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Financial evolution and the long-run behavior of velocity : new evidence from U.S. regional data

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  • Peter N. Ireland

Abstract

Innovations in the private financial sector influence the income velocity of money in an economy over the entire course of its development. In the early stages of growth, increased monetization, as manifested by the spread of the banking system, causes velocity to fall. Later, the emergence of nonbank financial intermediaries causes velocity to rise. Evidence of these patterns is found in regional demand deposit data from the United States.

Suggested Citation

  • Peter N. Ireland, 1991. "Financial evolution and the long-run behavior of velocity : new evidence from U.S. regional data," Economic Review, Federal Reserve Bank of Richmond, vol. 77(Nov), pages 16-26.
    • Handle: RePEc:fip:fedrer:y:1991:i:nov:p:16-26:n:v.77no.6
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    Cited by:

    1. Philip Gunby & Stephen Hickson, 2016. "Is Cash Dead? Using Economic Concepts To Motivate Learning and Economic Thinking," Working Papers in Economics 16/30, University of Canterbury, Department of Economics and Finance.
    2. Antonio Mele & Radoslaw Stefanski, 2019. "Velocity in the Long Run: Money and Structural Transformation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 393-410, January.
    3. Hakun Kim, 2004. "The Mathematical Decomposition of the Transactions Velocity of Money," Econometric Society 2004 Far Eastern Meetings 550, Econometric Society.
    4. Michael D. Bordo & Lars Jonung & Pierre Siklos, 1993. "The Common Development of Institutional Change as Measured by Income Velocity: A Century of Evidence from Industrialized Countries," NBER Working Papers 4379, National Bureau of Economic Research, Inc.
    5. A.E.Akinlo, 2012. "Financial Development and the Velocity of Money in Nigeria: An Empirical Analysis," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 4(2), pages 097-113, December.
    6. Susan Sunila Sharma & Ferry Syarifuddin, 2019. "Determinants Of Indonesia’S Income Velocity Of Money," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 21(3), pages 1-20, January.

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