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Portuguese Economic Journal

, Volume 17, Issue 2, pp 99–115 | Cite as

Determinants of the income velocity of money in Portugal: 1891–1998

  • Ana Bela Nunes
  • Miguel St. Aubyn
  • Nuno Valério
  • Rita Martins de Sousa
Original Article

Abstract

This paper performs a long-run time series analysis of the behaviour of the income velocity of money in Portugal between 1891 and 1998 by assessing the importance of both macroeconomic and institutional factors and looking for particularities in the Portuguese case. We estimate two cointegration vectors for the income velocity of money, macroeconomic variables and institutional variables. It is apparent that one of these vectors reflects the relationship between income velocity and macroeconomic variables, while the other reflects the relationship between income velocity and institutional variables. Moreover, a regression analysis reveals that the usual U-shaped pattern is displayed with a relatively late inflection point located around 1970, which is consistent with the Spanish case. It is further noted that this is a feature of countries with a late economic and institutional development process.

Keywords

Velocity of money Portugal Cointegration Institutional determinants 

JEL Classification

E41 E50 N10 

Notes

Acknowledgments

We are grateful to Claude Diebolt (CNRS), the participants of the FRESH (Future Research in Economic and Social History), Bureau d’Economie Theorique et Appliquée/CNRS, Strasburg, the participants of the Economic Department Seminar at ISEG/UTL. and António Afonso (UECE). The authors also thank two anonymous referees for their beneficial suggestions.

This work was supported by the Portuguese national funding agency for science, research and technology (FCT), under the Strategic Project PEst-OE/HIS/UI0431/2011 (GHES/CSG) and the Strategic Project UID/ECO/00436/2013 (UECE).

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Copyright information

© ISEG 2018

Authors and Affiliations

  1. 1.ISEG, (Lisbon School of Economics and Management), GHES-CSG (Research Unit on Economic and Social History)Universidade de LisboaLisbonPortugal
  2. 2.ISEG, (Lisbon School of Economics and Management), UECE/REM (Research Unit on Complexity and Economics)Universidade de LisboaLisbonPortugal

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