Money and Velocity in the 1980s
The behavior of money has changed greatly in the 1980s. This article identifies the newly emerging patterns in money and its relationship to economic activity. These new patterns, largely a consequence of both deregulation and disinflation, reveal an increased sensitivity of money to interest rates. The implications for the role of money in the monetary policy process are also discussed.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.