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The Financial Transformation of the 1980s and the Behavior of Velocity in Turkey

Published online by Cambridge University Press:  21 July 2015

Nur Keyder
Nur Keyder*
Affiliation:
Department of Economics, Middle East Technical University, Ankara
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Extract

The velocity of money (V) indicates the number of times money stock turns over in the economy to accommodate a given level of transactions (proxied by GNP). In other words, velocity measures the relationship between nominal income and the money stock. In the original version of the quantity theory of money, nominal income is equal to velocity times money stock; i.e. Py = MV where P stands for the price level, y is real income, M is the money stock. In this framework, when velocity is assumed to be constant, changes in money stock can create predictable effects on the nominal income.

Type
Articles
Information
New Perspectives on Turkey , Volume 8 , fall 1992 , pp. 67 - 87
Copyright
Copyright © New Perspectives on Turkey 1992

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