he Remarkable Stability of Monetary Base Velocity in the United States , 1919 - 1999

This analysis examines the long-run demand for the adjusted monetary base in the United States, 1919–1999. When the “price” of the base is measured by the inverse of the yield on long-term, high-quality corporate bonds and an appropriate functional form is selected, the quantity of base money demanded is found to be a stable function “...of a small number of variables.” § The authors are, respectively, vice president and economist, and senior vice president and director of research, Federal Reserve Bank of St. Louis. An earlier version of this paper was prepared by the second author for presentation at the 30 Konstanz Seminar, held to honor Karl Brunner. We thank Marcela Williams for research assistance and George Fortier for editorial assistance. Contact information: Anderson, [email protected], 314-444-8574; Rasche, [email protected], 314-444-8640. Fax: 314-444-8731. Views expressed are solely the authors and do not necessarily reflect those of the Federal Reserve Bank of St. Louis nor the Federal Reserve System.