Demand for Money: An Analysis of the Long-run Behavior of the Velocity of Circulation

The income velocity of money - a measure of the demand for money balances - is the ratio of the money value of income to the average money stock that the non-bank public holds in a given period. Why the magnitude of that ratio has changed over time is the subject of Michael D. Bordo and Lars Jonung’s classic study, The Long-Run Behavior of the Velocity of Circulation. Supported by statistical data, econometric estimation techniques, and meticulous historical analysis, this work describes, in an international setting, slow-moving economic, social, and political forces that interact with the decisions households and firms make about how much money to hold.