The Cycle of Money - Minimum Escape Savings and Financial Liquidity

Abstract

This paper discusses the velocities of the minimum escape savings and financial liquidity. This means that it examined the behavior of the money cycle under normal conditions while controlling for the velocity of minimum escape savings and the velocity of financial liquidity. Therefore, it has determined how the economy works based on its cycle of money. Escape savings are the savings that leave the economy. The minimum escape savings simultaneously enhance the enforcement savings, leading them to their maximum level. The enforcement savings are the savings that stay in the economy. Thence, it is plausible to extract conclusions about the consumption and the investments in each economy. For this analysis has used a Q.E. method approach.