It is commonly thought that interest rates should decrease in response to a positive velocity innovation. Velocity innovations, therefore, should lead to the same qualitative effects in the financial and goods markets as money supply innovations. The present paper represents an empirical investigation of the above theoretical statements. By using structural Vector Autoregression (VAR) methods, ...

Precis: This paper deals with the relationship in Ireland between money and prices during the period since 1960. It is shown that the causal relationship is from money to prices very much more than the other way about. Chain of causality is verified by analysing each half of the whole period 1960-1979. Based on data for the later half it is found that an annual rise of one per cent in money wil...

A prediction market is a place where individuals can wager on the outcomes of future events. Those who forecast the outcome correctly win money, and if they forecast incorrectly, they lose money. People value money, so they are incentivized to forecast such outcomes as accurately as they can. Thus, the price of a prediction market can serve as an excellent indicator of how likely an event is to...

Many issues that were traditionally analyzed using the Baumol-Tobin model can also be analyzed, perhaps more easily, using the Lucas (1980) cash-in-advance model where money serves both as a medium of exchange and as a store of value. This is illustrated by three examples (implications) of the Lucas model: (i) the velocity of money is time varying, volatile, and in‡ation-dependent; (ii) transit...

The house price-to-income ratio (PIR) is widely used as an affordability indicator. This paper complements the cross-sectionally focused literature by proposing a tractable model for PIR dynamics. Our predicts that very persistent and correlated to lagged aggregate output. Cross-country analysis confirms this prediction provides evidence long-term, positive, significant relationship between pro...

Sufficient conditions for the long run non-superneutrality of money are established in a neoclassical growth model with a labor-leisure choice. Money is held to satisfy a cash-in-advance constraint on consumption purchases. Production requires capital and labor while period utility depends on consumption and leisure. Sufficient conditions for increased money growth to reduce output in the long ...

This exercise sets up inter-linked labor and goods markets in a classroom macroeconomy. Students with worker roles are endowed with labor that can be consumed or sold to firms, who post wages, purchase labor, and produce goods that can either be consumed or sold to workers. The money from sales is used by firms to purchase labor in the next period. Complicated record keeping is avoided by using...

This paper uses a simple money demand and supply framework to estimate the impact of quantitative easing (QE) on asset prices and nominal spending. We use standard money accounting to try to establish the impact of asset purchases on broad money holdings. We show that the initial impact of £200 billion of asset purchases on the money supply was partially offset by other ‘shocks’ to the money su...