Precautionary Balances and the Velocity of Circulation of Money

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dc.contributor.author Faig, Miquel
dc.contributor.author Jerez, Belén
dc.date.accessioned 2012-05-17T12:50:41Z
dc.date.available 2012-05-17T12:50:41Z
dc.date.issued 2007
dc.identifier.bibliographicCitation Journal of Money, Credit and Banking. 2007, vol. 39, nº 4, p. 843–873
dc.identifier.issn 1538-4616
dc.identifier.uri http://hdl.handle.net/10016/5320
dc.description.abstract The 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.format.mimetype application/pdf
dc.format.mimetype text/plain
dc.language.iso eng
dc.publisher Blackwell
dc.relation.isversionof http://e-archivo.uc3m.es/handle/10016/335
dc.rights ©The Ohio State University
dc.subject.other Precautonary balance
dc.subject.other Monetary search
dc.subject.other Velocity of circulation of money
dc.subject.other Money demand
dc.title Precautionary Balances and the Velocity of Circulation of Money
dc.type article
dc.type.review PeerReviewed
dc.description.status Publicado
dc.relation.publisherversion http://dx.doi.org/10.1111/j.1538-4616.2007.00048.x
dc.subject.jel E41
dc.subject.jel E52
dc.subject.eciencia Economía
dc.identifier.doi 10.1111/j.1538-4616.2007.00048.x
dc.rights.accessRights openAccess
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 843
dc.identifier.publicationissue 4
dc.identifier.publicationlastpage 873
dc.identifier.publicationtitle Journal of Money, Credit and Banking
dc.identifier.publicationvolume 39
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