SFB 303 Discussion Paper No. B - 320
Author: Neumann, Manfred J. M., and Katrin Wesche
Title: Divergent Trends in the Velocity of Money
Abstract: This paper discusses alternative explanations of trends in the velocity
of different money aggregates put forward in the literature. We make a fresh
approach towards explaining changes in velocity trends by introducing a
hypothesis on the distribution of money holdings. This leads to a number of
new hypotheses about the impact of different kinds of structural change on
the velocity of money, such as permanent immigration, rising unemployment or
the growing importance of the services sector. We present some evidence for
Germany that suggests that trend changes in the structure of the economy may
have induced a negative velocity trend.
Keywords: Velocity of money
Creation-Date: July 1995
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