The paper presents a general equilibrium monetary production model to illustrate the influence of unexpected changes in the efficiency of the payments system on the velocity of circulation of money and on the financial markets, in the presence of uncertainty. In this model, households face a...

It is commonly thought that interest rates should decrease in response to a positive velocity innovation. Velocity innovations, therefore, should lead to the same qualitative effects in the financial and goods markets as money supply innovations. The present paper represents an empirical...