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Money velocity measures the rate at which money is exchanged in the economy. It is the number of times currency is transferred from one entity to another. Money velocity also refers to the extent to which a unit of currency is used in a given period of time.
Money velocity measures the rate at which money is exchanged in the economy. It is the number of times currency is transferred from one entity to another. Money velocity also refers to the extent to which a unit of currency is used in a given period of time. Simply put, it is the rate at which consumers and businesses in an economy collectively spend money.
Money velocity is typically measured as the ratio of gross domestic product (GDP) to a country's M1 or M2 money supply. The word “speed” here refers to how quickly money changes hands.
Money velocity is important in measuring how quickly money in circulation is used to purchase goods and services. It is used to help economists and investors measure the health and vitality of an economy. High money velocity is typically associated with a healthy, expanding economy. Low money velocity is often associated with recessions and contractions.
Economists use money velocity to measure how quickly money is used for goods and services in an economy. While it is not necessarily a key economic indicator, it can be tracked along with other key indicators that help determine the health of the economy, such as GDP, unemployment, and inflation. GDP and money supply are the two components of the money velocity formula.
Economies with higher money velocity tend to be more developed relative to other economies. The velocity of money also fluctuates with the business cycle. When the economy is expanding, consumers and businesses tend to be more willing to spend money, causing the velocity of money to increase. When the economy contracts, consumers and businesses are typically less willing to spend money and the velocity of money is lower.
Since money velocity is often correlated with the business cycle, it can also be correlated with key indicators. Therefore, money velocity typically rises with GDP and inflation. Alternatively, it is typically expected to fall when key economic indicators such as GDP and inflation decline in a contracting economy.
Suppose an economy consists of two people, A and B, each of whom has 100. Now B has 100, and B hires A to help with new construction on his house, paying A another 200 in cash. B then sells a car to A for 100 in cash. So even though both parties in the economy only have 400.
In this economy, the velocity of money would be 2, which is calculated by dividing the transaction volume of 200. This multiplication of the exchange value of goods and services is achieved through the velocity of money in the economy.
While the above provides a simplified example of money velocity, money velocity is used on a larger scale as a measure of the transaction activity of an entire country's population. Generally speaking, this measure can be thought of as the turnover rate of the entire economy's money supply.
For this application, economists typically use GDP and M1 or M2 as the money supply. Therefore, the formula for money velocity is written as GDP divided by the money supply.
<!-- @@@ -->GDP is commonly used as the numerator in money velocity formulas, although gross national product (GNP) can also be used. GDP represents the total amount of goods and services available for purchase in an economy. In the denominator, economists typically identify the money velocity of M1 and M2.
The Federal Reserve defines M1 as the sum of all currency held by the public and trading deposits at depository institutions. M2 is a broader measure of the money supply that adds savings deposits, time deposits, and real money market mutual funds. [1] Additionally, the St. Louis Federal Reserve tracks the quarterly velocity of currency using M1 and M2. [2]
Economists differ on whether money velocity is a useful indicator of the health of the economy or, more specifically, inflationary pressures. "Monetarists" who believe in the quantity theory of money believe that in the absence of expected changes, the velocity of money circulation should be stable, but changes in the money supply may change expectations, thereby changing the velocity of money circulation and inflation.
For example, in theory, an increase in the money supply should lead to a corresponding increase in prices, as there is more money chasing the same level of goods and services in the economy. A reduction in the money supply should do the opposite. Critics, on the other hand, argue that in the short term, money velocity varies widely and prices are resistant to changes, resulting in a weak and indirect link between the money supply and inflation.
Empirically, the data shows that the velocity of money is indeed variable. Additionally, the relationship between money velocity and inflation is variable. For example, from 1959 to the end of 2007, the circulation velocity of the M2 money stock averaged about 1.9 times, with a maximum of 2.198 times in 1997 and a minimum of 1.653 times in 1964. [3]
St. Louis Federal Reserve Bank
Money velocity has fallen sharply since 2007 as the Federal Reserve dramatically expanded its balance sheet in response to the global financial crisis and deflationary pressures.
Money velocity appears to have bottomed out at 1.435 in the second quarter of 2017 and gradually increased until the global recession triggered by the COVID-19 pandemic spurred a massive U.S. federal economic stimulus package. At the end of Q2 2020, M2V was at 1.100, the lowest reading for M2 money velocity in history. [3]
Several factors affect the velocity of money in an economy. These factors include:
According to the Federal Reserve Bank of St. Louis, the velocity of the M1 money supply has been declining steadily since the 2008 recession. [4]
Much of this decline is attributed to demographic changes and the effects of the Great Recession. As baby boomers approach retirement age and household wealth shrinks significantly, many consumers are more motivated than ever to save.
Federal regulations may also have played a role, as Dodd-Frank increased banks' reserve requirements and leverage ratios. Because these institutions are required to hold on to more of their assets rather than lend or spend them, less money moves through the economy.
One factor in the slowdown in money velocity is no mystery: the COVID-19 pandemic. Money velocity dropped sharply in 2020, likely due to increased economic uncertainty and the influx of stimulus payments.
Money velocity estimates the movement of money through an economyin other words, the average number of times each dollar changes hands in a year. High money velocity indicates a prosperous economy with strong economic activity, while low velocity indicates a general reluctance to spend money.
Money velocity is calculated by dividing a country's gross domestic product by its total money supply. This calculation can use the M1 money supply (which includes physical money, checkable deposits, and certain other figures) or the M2 supply (which also includes savings deposits and money market funds).
The velocity of money in the United States fell sharply in the first and second quarters of 2020, according to calculations by the Federal Reserve Bank of St. Louis. While there is no clear explanation, the reason for the decline could be due to reduced activity that occurred during the COVID-19 pandemic, as well as increased consumer savings due to economic uncertainty.
Money velocity represents the heartbeat of the economy. It measures how quickly money changes hands from one transaction to another. During boom times, the velocity of money tends to be high, indicating busy activity and frequent transactions. During a recession, velocity slows, indicating consumers are less willing to spend money or make transactions.
[1] The Federal Reserve. "What Is the Money Supply? Is It Important?"
[2] Federal Reserve Bank of St. Louis. "Money Velocity."
[3] Federal Reserve Bank of St. Louis. "Velocity of M2 Money Stock."
[4] Federal Reserve Economic Data. "Velocity of the M1 Money Supply."
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GDP 通常用作货币流通速度公式中的分子，尽管国民生产总值 (GNP) 也可以使用。GDP 代表一个经济体中可供购买的商品和服务的总量。在分母中，经济学家通常会识别 M1 和 M2 的货币流通速度。
美联储将 M1 定义为公众持有的所有货币和存款机构的交易存款的总和。M2 是更广泛的货币供应量衡量标准，增加了储蓄存款、定期存款和实际货币市场共同基金。[1] 此外，圣路易斯联邦储备银行使用 M1 和 M2 跟踪货币的季度流通速度。[2]
经济学家对于货币流通速度是否是衡量经济健康状况或更具体地说是通货膨胀压力的有用指标存在不同的看法。信奉货币数量论的“货币主义者”认为，在没有预期变化的情况下，货币流通速度应该是稳定的，但货币供应量的变化可能会改变预期，从而改变货币流通速度和通货膨胀。
例如，从理论上讲，货币供应量的增加应该会导致价格的相应上涨，因为有更多的钱追逐经济中相同水平的商品和服务。货币供应量的减少应该会发生相反的情况。另一方面，批评者认为，在短期内，货币流通速度变化很大，而且价格对变化具有抵抗力，导致货币供应量和通货膨胀之间的联系薄弱且间接。
从经验上看，数据表明货币流通速度确实是可变的。此外，货币流通速度与通货膨胀之间的关系也是可变的。例如，从 1959 年到 2007 年底，M2 货币存量的流通速度平均约为 1.9 倍，1997 年最高为 2.198 倍，1964 年最低为 1.653 倍。[3]
St. Louis Federal Reserve Bank
自 2007 年以来，由于美联储大幅扩张其资产负债表以应对全球金融危机和通货紧缩压力，货币流通速度急剧下降。
货币流通速度似乎在 2017 年第二季度触底至 1.435，并逐渐上升，直到 COVID-19 大流行引发的全球经济衰退刺激了大规模的美国联邦经济刺激计划。在 2020 年第二季度末，M2V 为 1.100，是历史上 M2 货币流通速度的最低读数。[3]
有几个因素会影响一个经济体中的货币流通速度。这些因素包括：
根据圣路易斯联邦储备银行的数据，自 2008 年经济衰退以来，M1 货币供应量的流通速度一直在稳步下降。[4]
这种下降的大部分原因归因于人口结构变化和经济大萧条的影响。随着婴儿潮一代接近退休年龄，家庭财富大幅减少，许多消费者比以往更有动力储蓄。
联邦法规也可能发挥了作用，因为《多德-弗兰克法案》提高了银行的准备金要求和杠杆率。由于这些机构被要求保留更多的资产，而不是借出或花费它们，因此经济中流动的资金减少了。
货币流通速度放缓的一个因素并不神秘：COVID-19 大流行。货币流通速度在 2020 年急剧下降，这可能是由于经济不确定性增加以及刺激性付款的涌入。
货币流通速度估计了货币在一个经济体中的流动换句话说，平均每美元在一年内易手的次数。高货币流通速度表明经济活动强劲的繁荣经济，而低流通速度表明普遍不愿花钱。
货币流通速度的计算方法是将一个国家的国内生产总值除以货币总供应量。此计算可以使用 M1 货币供应量（包括实物货币、可支票存款和某些其他数字）或 M2 供应量（也包括储蓄存款和货币市场基金）。
根据圣路易斯联邦储备银行的计算，美国的货币流通速度在 2020 年第一季度和第二季度急剧下降。虽然没有明确的解释，但下降的原因可能是由于 COVID-19 大流行期间发生的活动减少，以及由于经济不确定性导致消费者储蓄增加。
货币流通速度代表着经济的心跳。它衡量的是货币从一项交易到另一项交易的易手速度。在繁荣时期，货币流通速度往往很高，表明活动繁忙且交易频繁。在经济衰退期间，流通速度会放缓，表明消费者不太愿意花钱或进行交易。
[1] The Federal Reserve. "What Is the Money Supply? Is It Important?"
[2] Federal Reserve Bank of St. Louis. "Money Velocity."
[3] Federal Reserve Bank of St. Louis. "Velocity of M2 Money Stock."
[4] Federal Reserve Economic Data. "Velocity of the M1 Money Supply."
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