sharma-determinants-2019.pdf (967.38 kB)
Determinants of Indonesia's income velocity of money
journal contribution
posted on 2019-01-01, 00:00 authored by Susan SharmaSusan Sharma, F SyarifuddinUsing monthly time-series data and both short- and long-run models, our paper examines the determinants of Indonesia’s income velocity of money. Our findings strongly suggest that in the long-run, tax revenue, short-term interest rates, and industrial production, and in the short-run, money demand significantly determines income velocity of money. Our analysis suggests that the effect on income velocity is mostly over the long-run as most determinants are dormant in the short-run. The implication from a policy perspective is that shocks that are transitory are unlikely to burden income velocity.