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- Title
NEW EVIDENCE ON INCOME AND THE VELOCITY OF MONEY.
- Authors
Graves, Philip E.
- Abstract
Time series and cross-country empirical results suggest that cash holding as a proportion of income rises, or equivalently that velocity falls, as income increases. Numerous cross sectional findings at many points in time, in several countries conclude oppositely. It is argued here that the former findings suffer from omitted variable bias by ignoring sociodemographic variables affecting the demand for cash balances. When one incorporates such demand shifters into the analysis the time series and cross-country findings are seen as consistent with the critically reexamined cross sectional result that velocity increases with income.
- Subjects
CASH management; INCOME; TIME series analysis
- Publication
Economic Inquiry, 1978, Vol 16, Issue 1, p53
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.1978.tb00492.x