Empirical study of velocity of money in India - trends and its implications
Abstract
In this paper, empirical study of quarterly velocity of money for the Indian economy was carried out for the period spanning from 2004 to 2014. The study establishes that the velocity of money is highly predictable and is dependent on certain macro-economic factors such as interest rates, cash-deposit ratio and GDP. We found a stable velocity trend which affirms the indirect transmission of money in the economy. These findings are significant as money stocks growth projection is an important intermediate goal for Reserve Bank of India to effectively implement the framework of flexible inflation targeting. In this paper, we have also studied the behaviour of cash-deposit ratio and found that it follows a random-walk model.
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A stable income velocity of money function helps predict the influence of changes in the money supply on income and prices.
“A stable income velocity of money function helps in the prediction of the influence of changes in the money supply on income and prices (Akinlo, 2012;Oyadeyi & Akinbobola, 2022;Singh, 2023;Sud, 2023).”
From The Velocity of Money and Lessons for Monetary Policy in Nigeria: An Application of the Quantile ARDL Approach (2024) · cites this paper as Singh, 2023
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Oyadeyi, O. O. (2024) · Journal of the Knowledge Economy · doi:10.1007/s13132-024-02201-7 · Cited by 13 · see citing works
- Authors
- Singh, A.
- Affiliations
- Indian Institute of Management Ahmedabad (IN)
- Corresponding author
- Singh, Abhinav
- Venue
- International Journal of Economic Policy in Emerging Economies
- Publisher
- Inderscience Publishers
- Published
- 2023
- Volume
- 18
- Issue
- 2
- Pages
- 175-188
- ISSN
- 1752-0452 (ISSN-L)
- 1752-0460
- OpenAlex
- W4389949718
- Cited by
- 1
- References
- 0
- Citations by year
- 2024: 1
- FWCI
- 0.40
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- International Journal of Economic Policy in Emerging Economies (publishedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Keywords
- velocity of money, Indian economy, interest rates, gross domestic product, monetary policy, flexible inflation targeting, Reserve Bank of India, random walks, monetary policy transmission
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