Comments on Gordon, Leeper, and Zha’s “Trends in Velocity and Policy Expectations”

Creator

• McGrattan, Ellen R.

Series

• Staff report (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• 247

Date Created

• 1998-05

Abstract

• I argue that low-frequency movements in U.S. base velocity are well explained by standard models of money demand. The model of Gordon, Leeper, and Zha is not standard because they assume a very high interest elasticity. The positive conclusion that they reach about the model’s ability to mimic movements in velocity necessarily implies that predicted movements in interest rates are too smooth.

Related information

• Published in: Carnegie-Rochester Series on Public Policy (No. 49, December 1998, pp. 305-316) https://doi.org/10.1016/S0167-2231(99)00012-3.

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Research Paper

DOI

•  https://doi.org/10.21034/sr.247

License

• Creative Commons BY-NC Attribution-NonCommercial 4.0 International

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• Staff Reports

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