Journal Article

Financial evolution and the long-run behavior of velocity : new evidence from U.S. regional data

Abstract: Innovations in the private financial sector influence the income velocity of money in an economy over the entire course of its development. In the early stages of growth, increased monetization, as manifested by the spread of the banking system, causes velocity to fall. Later, the emergence of nonbank financial intermediaries causes velocity to rise. Evidence of these patterns is found in regional demand deposit data from the United States.

Keywords: Money; Regional economics;

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Review

Publication Date: 1991

Volume: 77

Issue: Nov

Pages: 16-26