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Precautionary Balances and the Velocity of Circulation of Money

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorFaig, Miquel
dc.contributor.authorJerez, Belén
dc.date.accessioned2012-05-17T12:50:41Z
dc.date.available2012-05-17T12:50:41Z
dc.date.issued2007
dc.description.abstractThe low velocity of circulation of money implies that households hold more money than they normally spend. This behavior is explained if households face uncertain expenditure needs, so that they have a precautionary motive for holding money. We investigate this motive in a search model where households are subject to preference shocks. The model predicts that velocity is not only low but also interest elastic. The model closely fits U.S. data on velocity and interest rates (1892–2004). The empirical analysis reveals a dramatic reduction in precautionary balances toward the end of our sample, which is important for policy issues.
dc.description.statusPublicado
dc.format.mimetypeapplication/pdf
dc.format.mimetypetext/plain
dc.identifier.bibliographicCitationJournal of Money, Credit and Banking. 2007, vol. 39, nº 4, p. 843–873
dc.identifier.doi10.1111/j.1538-4616.2007.00048.x
dc.identifier.issn1538-4616
dc.identifier.publicationfirstpage843
dc.identifier.publicationissue4
dc.identifier.publicationlastpage873
dc.identifier.publicationtitleJournal of Money, Credit and Banking
dc.identifier.publicationvolume39
dc.identifier.urihttp://hdl.handle.net/10016/5320
dc.language.isoeng
dc.publisherBlackwell
dc.relation.isversionofhttp://e-archivo.uc3m.es/handle/10016/335
dc.relation.publisherversionhttp://dx.doi.org/10.1111/j.1538-4616.2007.00048.x
dc.rights©The Ohio State University
dc.rights.accessRightsopen access
dc.subject.ecienciaEconomía
dc.subject.jelE41
dc.subject.jelE52
dc.subject.otherPrecautonary balance
dc.subject.otherMonetary search
dc.subject.otherVelocity of circulation of money
dc.subject.otherMoney demand
dc.titlePrecautionary Balances and the Velocity of Circulation of Money
dc.typeresearch article*
dc.type.hasVersionAM*
dc.type.reviewPeerReviewed
dspace.entity.typePublication
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