The theoretical proposition of stable velocity of money is being wea kened by the recent researchers.…

Monetarists, led by Milton Friedman, built their case on a stable demand for money, and so a stable velocity of money: if velocity is stable, changes in the money supply predict changes in nominal income. Research showing that velocity is unstable therefore weakens the monetarist position. Keynesians had always argued that velocity and money demand were unstable, so the findings support rather than weaken them.