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The Mathematical Decomposition of the Transactions Velocity of Money

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  • Hakun Kim

Abstract

This paper is an attempt to decompose the average transactions velocity of money into two or more individual velocities. When the economy-wide velocity is expressed as a weighted average of two disaggregated velocities, this provides an equation with two unknowns. The additional equation can be created from the concept of two versions of the exchange equations; the Fisherian and Cambridge equation. The former represents the Fisherian problem, while the latter the Marshallian problem. Their integration furnishes us with the second equation to solve the system

Suggested Citation

  • Hakun Kim, 2004. "The Mathematical Decomposition of the Transactions Velocity of Money," Econometric Society 2004 Far Eastern Meetings 550, Econometric Society.
    • Handle: RePEc:ecm:feam04:550
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    File URL: http://repec.org/esFEAM04/up.10404.1079678920.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    velocity indifference curve; iso-velocity line; transactions time;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G2 - Financial Economics - - Financial Institutions and Services

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