A stochastic growth model with money introduced via a cash-in-advance constraint is used to analyze the income velocity of real balances. The variability of velocity arises because of the uncertainty about the realization of the state of the economy. Velocity corresponding to the range of values found in empirical data can be obtained.
|Publication status||Published - 1 Jul 1998|
- Cash-in-advance model
- Endogenous growth
- Income velocity