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Income Velocity and Institutional Change: Some New Time Series Evidence, 1870-1986


  • Siklos, Pierre L


This paper applies tests of cointegration to assess whether institutional factors, in addition to income and an interest rate, explain the long-run behavior of velocity. Over a century of annual data from five industrialized countries are used. Institutional characteristics make a significant contribution to the determination of velocity in all the countries considered. One generally rejects the hypothesis of cointegration between velocity and its traditional determinants but the same hypothesis cannot be rejected when velocity is also a function of institutional change proxies. Tests of coefficient stability also reinforce the validity of the institutional change hypothesis of velocity. Copyright 1993 by Ohio State University Press.

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  • Siklos, Pierre L, 1993. "Income Velocity and Institutional Change: Some New Time Series Evidence, 1870-1986," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(3), pages 377-392, August.
  • Handle: RePEc:mcb:jmoncb:v:25:y:1993:i:3:p:377-92

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    References listed on IDEAS

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    Cited by:

    1. William A. Barnett & Yi Liu & Haiyang Xu & Mark Jensen, 1996. "The CAPM Risk Adjustment Needed for Exact Aggregation over Financial Assets," Econometrics 9602003, EconWPA.
    2. Al-Mashat, Rania A. & Grigorian, David A., 1998. "Economic reforms in Egypt : emerging patterns and their possible implications," Policy Research Working Paper Series 1977, The World Bank.
    3. 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.
    4. Serpil Canbas & Murat Doganlar & Yildirim B.Onal, 2002. "Measurement of Foreign Exchange Exposure on the Turkish Private Banks’ Stock Prices," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 6(22), pages 17-32.
    5. Gillman M. & Siklos & P.L.Silver & J.L., 1996. "Money Velocity with Costly Credit," Department of Economics - Working Papers Series 515, The University of Melbourne.
    6. Hunte, C.K, 2011. "The Equation of Exchange: A Derivation," MPRA Paper 43531, University Library of Munich, Germany.
    7. Fatih Cin & Fikret Dulger, 2002. "Income Velocity of Money (M2): The Case of Turkey, 1986-2000," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 6(22), pages 33-48.
    8. Richard CK Burdekin & Ilan Noy, 2005. "What Has Driven Chinese Monetary Policy Since 1990? Investigating the People's Bank's Policy Rule," Economics Study Area Working Papers 85, East-West Center, Economics Study Area.
    9. Martha Misas A. & Enrique López E. & Luis Fernando Melo V., 1999. "La inflación desde una perspectiva monetaria: un modelo P* para Colombia," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 0(35), pages 5-53, Junio.
    10. Burdekin, Richard C.K. & Siklos, Pierre L., 2008. "What has driven Chinese monetary policy since 1990? Investigating the People's bank's policy rule," Journal of International Money and Finance, Elsevier, vol. 27(5), pages 847-859, September.
    11. Armando Rodríguez Zerpa, José U. Mora Mora, 2013. "La demanda de dinero y las innovaciones financieras en Venezuela: equilibrio de largo plazo," REVISTA CIFE, UNIVERSIDAD SANTO TOMÁS, June.
    12. Tulay Yucel & Gulizar Kurt, 2002. "Cash Conversion Cycle, Cash Management and Profitability: An Empirical Study on the ISE Traded Companies," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 6(22), pages 1-16.

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