The income velocity of money-an inverse measure of the demand for money balances-is the ratio of the money value of income to the average money stock that the public (excluding banks) holds in a given period. Why the magnitude of that ratio has changed over time is the subject of Michael D. Bordo and Lars Jonung's classic study. Supported by statistical data, ecometric estimation techniques, and meticulous historical analysis, this work describes, in an international setting, how slow-moving ecomic, social, and political forces interact with the decisions households and fi rms make about how much money to hold.
Michael D. Bordo is professor of economics and director of the Center for Monetary and Financial History at Rutgers University, New Jersey, and a research associate of the National Bureau of Economic Research, Cambridge, Massachusetts. He has also taught at the University of South Carolina, Carleton University, the University of California, Los Angeles, Carnegie Mellon University, and Princeton University. He is editor of a series of books for Cambridge University Press, Studies in Macroeconomic History, and the author of Essays on the Gold Standard and Related Regimes, and (with Anna J. Schwartz) A. Retrospective on the Classical Gold Standard 1821-1931. Lars Jonung is professor of economics at the Stockholm School of Economics. He is the editor of The Stockholm School of Economics Revisited, and the co-author (with Steve H. Hanke and Kurt Schuler) of Russian Currency and Finance: A Currency Board Approach to Reform.