Estimating the Trend of M3 Income Velocity Underlying the Reference Value for Monetary Growth

66 Pages Posted: 9 Jul 2005

See all articles by Claus Brand

Claus Brand

European Central Bank (ECB)

Dieter Gerdesmeier

European Central Bank (ECB)

Barbara Roffia

European Central Bank (ECB)

Date Written: May 2002

Abstract

This paper documents the analytical work that was carried out for the 2001 review of the assumption for the trend in M3 income velocity used to calculate the reference value for M3 growth. We analyze the medium-term trend in velocity using univariate time series tools and different money demand models. In addition, some cross-checking is carried out to address data compilation issues related to the accession of Greece in 2001 and to different weighting schemes used to aggregate historical euro area data. It is found that the trend decline in M3 income velocity over the medium term is within a range of 1/2% to 1% per year.

Suggested Citation

Brand, Claus and Gerdesmeier, Dieter and Roffia, Barbara, Estimating the Trend of M3 Income Velocity Underlying the Reference Value for Monetary Growth (May 2002). ECB Occasional Paper No. 3. Available at SSRN: https://ssrn.com/abstract=748966

Claus Brand (Contact Author)

European Central Bank (ECB) ( email )

Eurotower
Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany
+0049 69 13440 (Phone)
+0044 69 1344 6000 (Fax)

Dieter Gerdesmeier

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Barbara Roffia

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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