IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2209.01512.html
   My bibliography  Save this paper

Holding Periods: Measuring the Inverse of Money Velocity from Transaction Records

Author

Listed:
  • Carolina E. S. Mattsson
  • Allison Luedtke
  • Frank W. Takes

Abstract

This paper defines the average holding period of money and proposes a methodology for fully disaggregated measurement. Our measure is shown to be the inverse of the transfer velocity of money under stationary conditions, which is implicitly assumed in conventional aggregate measurement. Our methodology does not require stationarity. We leverage a recent computational technique to extract empirical holding periods from micro-level transaction data as recorded by real-world payment systems. This enables novel empirical analyses of money velocity under non-stationarity conditions. We illustrate several such analyses on Sarafu, a small digital community currency in Kenya, where transaction data is available from 25 January 2020 to 15 June 2021. Our measure implies faster circulation than does the aggregate transfer velocity; we can say that 58% of Sarafu was effectively static. We also disaggregate by geography to study the heterogeneous impact of economic disruptions related to the COVID-19 pandemic on Sarafu. Finally, we consider an ad-hoc currency management operation that took place in October 2020. Measuring the average holding period of money makes it possible to track money velocity during ongoing monetary interventions and on other important occasions when conditions are not stationary.

Suggested Citation

  • Carolina E. S. Mattsson & Allison Luedtke & Frank W. Takes, 2022. "Holding Periods: Measuring the Inverse of Money Velocity from Transaction Records," Papers 2209.01512, arXiv.org, revised Mar 2025.
    • Handle: RePEc:arx:papers:2209.01512
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2209.01512
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Leanne Ussher & Laura Ebert & Georgina M. Gómez & William O. Ruddick, 2021. "Complementary Currencies for Humanitarian Aid," JRFM, MDPI, vol. 14(11), pages 1-30, November.
    2. Andras Brody, 2000. "The Monetary Multiplier," Economic Systems Research, Taylor & Francis Journals, vol. 12(2), pages 215-219.
    3. Aditya Aladangady & Shifrah Aron-Dine & Wendy Dunn & Laura Feiveson & Paul Lengermann & Claudia Sahm, 2021. "From Transaction Data to Economic Statistics: Constructing Real-Time, High-Frequency, Geographic Measures of Consumer Spending," NBER Chapters, in: Big Data for Twenty-First-Century Economic Statistics, pages 115-145, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. N. Vijayamohanan Pillai, 2004. "Causality and error correction in Markov chain: Inflation in India revisited," Centre for Development Studies, Trivendrum Working Papers 366, Centre for Development Studies, Trivendrum, India.
    2. Kohei Matsumura & Yusuke Oh & Tomohiro Sugo & Koji Takahashi, "undated". "Nowcasting Economic Activity with Mobility Data," Bank of Japan Working Paper Series 21-E-2, Bank of Japan.
    3. Gallin, Joshua & Molloy, Raven & Nielsen, Eric & Smith, Paul & Sommer, Kamila, 2021. "Measuring aggregate housing wealth: New insights from machine learning ☆," Journal of Housing Economics, Elsevier, vol. 51(C).
    4. Daniel Aaronson & Scott A. Brave & Michael Fogarty & Ezra Karger & Spencer D. Krane, 2021. "Tracking U.S. Consumers in Real Time with a New Weekly Index of Retail Trade," Working Paper Series WP-2021-05, Federal Reserve Bank of Chicago, revised 18 Jun 2021.
    5. Raj Chetty & John N Friedman & Michael Stepner & Opportunity Insights Team & Camille Baker & Harvey Barnhard & Matt Bell & Gregory Bruich & Tina Chelidze & Lucas Chu & Westley Cineus & Sebi Devlin-Fol, 2024. "The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 829-889.
    6. Abraham,Facundo & Schmukler,Sergio L. & Tessada,Jose, 2019. "Using Big Data to Expand Financial Services : Benefits and Risks," Research and Policy Briefs 143463, The World Bank.
    7. Brave, Scott A. & Butters, R. Andrew & Fogarty, Michael, 2022. "The perils of working with big data, and a SMALL checklist you can use to recognize them," Business Horizons, Elsevier, vol. 65(4), pages 481-492.
    8. Teodoro Criscione, 2024. "Topological Components in a Community Currency Network," Papers 2409.13674, arXiv.org, revised Mar 2025.
    9. Marta Crispino & Vincenzo Mariani, 2023. "A tool to nowcast tourist overnight stays with payment data and complementary indicators," Questioni di Economia e Finanza (Occasional Papers) 746, Bank of Italy, Economic Research and International Relations Area.
    10. Timiryanova, Venera, 2022. "Высокочастотные Данные, Характеризующие Розничную Торговлю: Интересы Государства, Предприятий И Научных Организаций [High-frequency retail data: the interests of the state, enterprises and scientif," MPRA Paper 115681, University Library of Munich, Germany.
    11. Carolina E S Mattsson & Teodoro Criscione & Frank W Takes, 2022. "Circulation of a digital community currency," Papers 2207.08941, arXiv.org, revised Jun 2023.
    12. Ademmer, Martin & Beckmann, Joscha & Bode, Eckhardt & Boysen-Hogrefe, Jens & Funke, Manuel & Hauber, Philipp & Heidland, Tobias & Hinz, Julian & Jannsen, Nils & Kooths, Stefan & Söder, Mareike & Stame, 2021. "Big Data in der makroökonomischen Analyse," Kieler Beiträge zur Wirtschaftspolitik 32, Kiel Institute for the World Economy (IfW Kiel).
    13. Carolina Mattsson, 2019. "Networks of monetary flow at native resolution," Papers 1910.05596, arXiv.org.
    14. Ashley Sexton & Maria D. Tito, 2022. "The Vaccine Boost: Quantifying the Impact of the COVID-19 Vaccine Rollout on Measures of Activity," Finance and Economics Discussion Series 2022-035, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2209.01512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.