Effective factors on velocity of money in Iran

Abstract

Investigating the factors affecting the velocity of money, that plays an important role as a key variable in the economy. This study aims to investigate the variable behavior of the velocity of money in the economy during the period of 1340-1389, that evaluate the effect of important variables such as national income, real exchange rate, inflation rate, increased liquidity coefficient, the money in the hands of individuals and other factors over through the course by collective model. Based on the results, there is a positive long-run equilibrium relationship between velocity of money and variables such as national income, increased liquidity coefficient, exchange rates and inflation rates. On the other hand the money in the hands of individuals, private sector deposits has a negative impact on the velocity of money.