Money and Velocity During Financial Crises: From the Great Depression to the Great Recession / Richard G. Anderson, Michael Bordo, John V. Duca.

Format:

Book

Author/Creator:

Anderson, Richard G.

Contributor:

National Bureau of Economic Research.

Bordo, Michael.

Duca, John V.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22100.

NBER working paper series no. w22100

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Money and Velocity During Financial Crises

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

This study offers a single, consistent model that tracks the velocity of broad money (M2) since 1929, including the Great Depression, the global financial crisis, and the Great Recession. The model emphasizes the roles of changes in uncertainty and risk premia, financial innovation, and major banking regulations. Our findings suggest an enhanced role of a broad, liquid money aggregate as a policy guide during crises and their unwinding. Following crises, policymakers face the challenge of not only unwinding their balance sheet so as to prevent excess reserves from fueling a surge in M2, but also countering a fall in the demand for money as risk premia return to normal amid velocity shifts stemming from relevant financial reforms.

Notes:

Print version record

March 2016.