Inflation and Monetary Velocity in Latin America

Hanson, James S.; Vogel, Robert C.

doi:10.2307/1927961

Cited by 9 publications

(5 citation statements)

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“…(b) the Bank of Italy has systematically and heavily interfered with free capital movements ; (c) domestic interest rates are not totally independent of the behaviour of Eurodollar rates (Neumann, 1977); and (d) in studies of money demand it has never turned out to be easy to get high and/or statistically significant coefficients on the rate of inflation and foreign interest rates (Friedman, 1959;Hanson, 1973;Kanniainen, 1979;Selden, 1956;Shapiro, 1973); in particular, as far as the long-run elasticity with respect to the Eurodollar rate is concerned, one might recall that Hamburger and Wood's (1978) results (-0.05 for the United States and -0.07 for the United Kingdom) are not too dissimilar to ours. The J and K values fall within the permitted range and the combination of the two does not appear to be unreasonable.…”

Section: I1mentioning

confidence: 99%

Money Demand in Italy: A Few More Results *

Calliari

Spinelli

Verga³

1984

The Manchester School

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I I n the empirical literature on the demand for money in Italy several important issues remain to be settled; they concern stability, simultaneity, the nature of the adjustment process, the role of the domestic rate of inflation and that of foreign interest rates (Calliari, Spinelli and Verga, 1981). The purpose of the paper is to consider these issues.1Our major conclusions are as follows. A Feige (1967)-type of equation with permanent income and partial adjustment out-performs simpler models ; actual money balances adjust fairly quickly, whereas the gap between actual and permanent income takes two years to close. Three proxies for the opportunity cost of holding money, a long-term domestic interest rate, the inflation rate, and the uncovered Eurodollar rate, turn out to affect desired money balances in a statistically significant fashion. Nothing changes when polynomial distributed lags replace the Koyck transformations. Finally, no serious stability problem is encountered over the sample period 1975(2)-1980(1). I1Throughout t.he paper capital letters indicate natural values, small letters natural logarithms, L is the lag operator, p the first order autocorrelation coefficient; optimum quantities are denoted by *, and the value of a parameter which has been apriori constrained appears in square brackets. *Manuscript received 18.6.82; final version received 24.6.83.lHere we will not report on the empirical results concerning simultaneity. They are available on request from the authors. Basically we found that a three-equation simultaneous system (money demand, money supply and demand for unborromed reserves) generates the same results for money demand as a single equation.

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Section: I1mentioning

confidence: 99%

Money Demand in Italy: A Few More Results *

Calliari

Spinelli

Verga³

1984

The Manchester School

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“…Melitz and Correa () find a negative effect of inflation on velocity. Hanson and Vogel () claim that inflation increases velocity. Gould and Nelson () assert that the velocity of money is not constant over time and exhibits persistent decreases.…”

Section: Introductionmentioning

confidence: 99%

Staying vigilant of uncertainty to velocity of money: an application for oil‐producing countries

Şahin

2018

OPEC Energy Review

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Uncertainty in economic and financial variables has substantially changed the dynamics in monetary economics during the last two decades in oil‐producing countries. However, there are types of uncertainties which affect these countries heterogeneously in the short run and long run. For this purpose, Autoregressive Distributed Lag Model (ARDL) is estimated for oil‐producing countries and non‐homogenous results for money supply, income, oil, interest rate, US monetary policy and exchange uncertainties have been obtained.

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“…This includes studies by Klein (1973), Hanson andVogel (1973), andLatane (1960) that explore the impact of interest rates and inflation on income velocity; and the studies by Jonung (1978) and Bordo andjonung (1981, 1985), which emphasize ;influences of institutional factors in the income velocity function.…”

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confidence: 99%

“…The number of bank branches has been used by, among others, Short (1973), Khan (1980), Bordo and Jonung (1981), and Phiri (1989). The Goldsmith's classification was used in the cross-country study of velocity by Melitz and Correa (1970), but its plausibility is questioned by Wallich (1971) and Hanson and Vogel (1973). Other proxies for monetization include a measure of urbanization used by Melitz and Correa (op cit.…”

mentioning

confidence: 99%

“…Some studies which have established a positive correlation between the income velocity and inflation used the current rate of inflation rather than the expected rate of inflation. See, for example, Ezekiel and Adenkule (1969); Hanson and Vogel (1973) and Short (1973). Others have used the current rate of inflation by evoking an assumption of static inflationary expectations, Phiri (1989) used the expected rate of inflation generated by the adaptive expectation method in Tanzania and also got results consistent with ours.…”

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confidence: 99%

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