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Determinants of Indonesia's income velocity of money

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journal contribution
posted on 01.01.2019, 00:00 authored by Susan SharmaSusan Sharma, F Syarifuddin
Using monthly time-series data and both short- and long-run models, our paper examines the determinants of Indonesia’s income velocity of money. Our findings strongly suggest that in the long-run, tax revenue, short-term interest rates, and industrial production, and in the short-run, money demand significantly determines income velocity of money. Our analysis suggests that the effect on income velocity is mostly over the long-run as most determinants are dormant in the short-run. The implication from a policy perspective is that shocks that are transitory are unlikely to burden income velocity.

History

Journal

Buletin Ekonomi Moneter dan Perbankan

Volume

21

Issue

3

Pagination

323 - 342

Publisher

Bank Indonesia, Central Banking Research Department

Location

Jakarta, Indonesia

ISSN

1410-8046

eISSN

2460-9196

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

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