Some Evidence on the Elusive 1982 Shift in Velocity Drift

It is well documented that in the post-Accord period in the United States, the velocity of both Ml (as presently measured) and the monetary base behaves like a random walk with drift. This statistical model is stable through late 1981. Beginning in 1982, a substantial change occurs in the drift parameter. Subsequently, both measures of velocity behave like random walks without significant drift. This "shift in the drift" is the source of the widespread conclusion that there no longer exists a stable relationship between the nominal money supply and nominal measures of economic activit