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Income Velocity and Institutional Change: Seven Countries, 1960 - 2015
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
2018 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This paper examines whether institutional factors in addition to income and interest rate can explain the long-run behaviour of velocity for the U.S., U.K., Canada, Japan, Sweden, Norway,and Denmark. To understand this, multivariate co-integration and error correction modelling approach will be used along with over a half-century of annual data. Changes in institutional proxies, such as monetization and financial development make a significant contribution to the determination of velocity in some countries studied. Evidence suggests, there is a unique longrun relationship of income velocity in a model which includes institutional factors. However, it rejects the hypothesis of co-integration between velocity and the traditional determinants for almost all countries considered. Moreover, the empirical results indicate that interest rate, percapita income, bank deposit to income and bank assets to income affect velocity negatively while currency-money ratio has a significant positive effect on velocity.

Place, publisher, year, edition, pages
2018.
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-149828OAI: oai:DiVA.org:umu-149828DiVA, id: diva2:1228064
Available from: 2018-06-27 Created: 2018-06-27 Last updated: 2018-06-27Bibliographically approved

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CiteExportLink to record
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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
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  • de-DE
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Output format
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