DETERMINANTS OF INDONESIA’S INCOME VELOCITY OF MONEY
Using monthly time-series data and both short-and long-run models, our paperexamines the determinants of Indonesia’s income velocity of money. Our findingssuggest that in the long-run, tax revenue, short-term interest rate, industrial productionand, in the short-run, money demand, significantly determine income velocity ofmoney. Our analysis suggests that the effect on income velocity is mostly over thelong-run as most determinants are dormant in the short-run. The implication from apolicy perspective is that shocks are unlikely to burden income velocity over short timehorizons.
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Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.