Comments on Gordon, Leeper, and Zha's trends in velocity and policy expectations

I argue that low-frequency movements in U.S. base velocity are well explained by standard models of money demand. The model of Gordon, Leeper, and Zha is not standard because they assume a very high interest elasticity. The positive conclusion that they reach about the model's ability to mimic movements in velocity necessarily implies that predicted movements in interest rates are too smooth.

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Year of publication:	1998
Authors:	McGrattan, Ellen R.
Institutions:	Federal Reserve Bank of Minneapolis
Subject:	Money supply

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Extent:	application/pdf
Series:	Staff Report.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Published in Carnegie-Rochester Series on Public Policy (No. 49, 1998, pp. 305-316) Number 247
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005498485