Building upon the insight that M1 velocity is the permanent component of nominal interest rates - see Benati (2020) - I … approach is to () project the monetary policy rate onto M1 velocity-thus obtaining an estimate of the nominal natural rate … presents two key advantages: (1) under regimes making inflation I(0), M1 velocity is equal, up to a linear transformation, to …

Since World War I, M1 velocity has been, to a close approximation, the permanent component of the short-term nominal … velocity uniquely reflect, to a close approximation, permanent shifts in the natural rate of interest. Evidence from the Euro … area and several inflation-targeting countries is compatible with this notion, with velocity fluctuations being …

Since World War II, permanent interest rate shocks have driven nearly all of the fluctuations of U.S. M1 velocity …, which is cointegrated with the short rate, and most of the long-horizon variation in the velocity of M2-M1. Permanent … velocity shocks specific to M2-M1, on the other hand, have played a minor role. Further, counterfactual simulations show that …