DETERMINANTS OF INDONESIA’S INCOME VELOCITY OF MONEY
Open accessAbstract
Using monthly time-series data and both short- and long-run models, our paper examines the determinants of Indonesia’s income velocity of money. Our findings strongly suggest that in the long-run, tax revenue, short-term interest rates, and industrial production, and in the short-run, money demand significantly determines income velocity of money. Our analysis suggests that the effect on income velocity is mostly over the long-run as most determinants are dormant in the short-run. The implication from a policy perspective is that shocks that are transitory are unlikely to burden income velocity.
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The velocity of money (V) is a function of per capita income, interest rates, exchange rates, inflation rates, and financial development.
“In this respect, the velocity of money (V) was considered to be a function of factors such as per capita income (y), interest rates (r), exchange rates (exc), inflation rates (π t ), and financial development (fd).”
From The Velocity of Money and Lessons for Monetary Policy in Nigeria: An Application of the Quantile ARDL Approach (2024) · cites this paper as Sharma and Syarifuddin (2019)
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“This is mathematically expressed as follows: Studies by Akinlo (2012), Nunes et al. (2018), and Sharma and Syarifuddin (2019) have examined the determinants of the income velocity of money.”
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- Authors
- Sharma, S. S., & Syarifuddin, F.
- Affiliations
- Deakin University (AU)
- Bank Indonesia (ID)
- Venue
- Buletin Ekonomi Moneter dan Perbankan
- Published
- 2019-02-28
- Volume
- 21
- Issue
- 3
- Pages
- 323-342
- ISSN
- 1410-8046 (ISSN-L)
- 2460-9196
- OpenAlex
- W2918232615
- Cited by
- 17
- References
- 23
- Citations by year
- 2026: 2 · 2025: 2 · 2024: 5 · 2023: 1 · 2022: 1 · 2021: 3 · 2019: 3
- FWCI
- 3.77
- Type
- journal article
- Language
- en
- Open access
- diamond
- doi.org
- Licence
- Locations
- Bulletin of Monetary Economics and Banking (publishedVersion, cc-by-nc)
- RePEc: Research Papers in Economics (submittedVersion)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
- Deakin Research Online (Deakin University) (submittedVersion)
- Figshare (submittedVersion, cc-by)
- Funders
- # (#)
- 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
- income velocity of money, tax revenue, short-term interest rates, industrial production, money demand, short-run and long-run effects, transitory shocks, monetary policy, Indonesia
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