Comply with as much as Is Velocity Steady? Half MXXVI. With knowledge as much as 2023Q4, the reply stays “no”.
Determine 1: M2 velocity calculated utilizing GDP (blue), M4 divisia velocity (tan), each in logs, 1990Q1=0. NBER outlined peak-to-trough recession dates shaded grey. Supply: Federal Reserve, BEA, through FRED, CFS, NBER, and creator’s calculations.
One would suppose {that a} look on the knowledge would suffice, however some readers have (nicely, one has) averred that consultants contemplate velocity secure when utilizing divisia measures of cash. With a view to accommodate these views, I add in M4 Divisia velocity.
An ADF check utilized to each velocity collection (in logs) fails to reject unit root null, whereas a KPSS check utilized to each collection rejects at 5% msl the development stationary null.
