{"id":213166,"date":"2024-03-14T00:26:39","date_gmt":"2024-03-14T00:26:39","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/03\/14\/is-velocity-stable-part-mxxvii\/"},"modified":"2025-06-25T17:20:40","modified_gmt":"2025-06-25T17:20:40","slug":"is-velocity-stable-part-mxxvii","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/03\/14\/is-velocity-stable-part-mxxvii\/","title":{"rendered":"Is Velocity Stable? Part MXXVII"},"content":{"rendered":"

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Follow up to Is Velocity Stable? Part MXXVI<\/a>. With data up to 2023Q4, the answer remains \u201cno\u201d.<\/p>\n

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Figure 1:<\/strong> M2 velocity calculated using GDP (blue), M4 divisia velocity (tan), both in logs, 1990Q1=0. NBER defined peak-to-trough recession dates shaded gray. Source: Federal Reserve, BEA, via FRED, CFS<\/a>, NBER, and author\u2019s calculations.<\/em><\/p>\n

One would think that a glance at the data would suffice, but some readers have (well, one has<\/a>) averred that experts consider velocity stable when using divisia measures of money. In order to accommodate those views, I add in M4 Divisia velocity.<\/p>\n

An ADF test applied to both velocity series (in logs) fails to reject unit root null, while a KPSS test applied to both series rejects at 5% msl the trend stationary null.<\/p>\n

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