The Demand for Money Theoretical and Empirical Approaches [Paperback]

This is the most comprehensive textbook available on the money demand function and its role in modern macroeconomics. The book takes a microeconomic- and aggregation-theoretic approach to the topic and presents empirical evidence using state-of-the-art econometric methodology, while recognizing the existence of unsolved problems and the need for further developments. The new edition is fully revised and includes new chapters.

Almost half a century has elapsed since the demand for money began to attract widespread attention from economists and econometricians, and it has been a topic of ongoing controversy and research ever since. Interest in the topic stemmed from three principal sources. Firstofall,therewasthematter oftheinternaldynamicsofmacr- conomics, to which Harry Johnson drew attention in his 1971 Ely Lecture on The Keynesian Revolution and the Monetarist Counter- Revolution, American Economic Review 61 (May 1971). The main lesson about money that had been drawn from the so-called Key- sian Revolution was  rightly or wrongly  that it didnt matter all that much. The inherited wisdom that undergraduates absorbed in the 1950s was that macroeconomics was above all about the determination of income and employment, that the critical factors here were saving and investment decisions, and that monetary factors, to the extent that they mattered at all, only had an in?uence on these all important variables through a rather narrow range of market interest rates. C- ventional wisdom never goes unchallenged in economics, except where its creators manage to control access to graduate schools and the jo- nals,anditiswithnocynicalintentthatIcon?rmJohnsonssuggestion that those of us who embarked on academic careers in the 60s found in this wisdom a ready-made target.Preface.- Foreword.- Introduction.- Classical Macroeconomc Theory.- Keynesian Macroeconomic Theory.- Dynamic Optimization Methods in Discrete Time.- Neoclassical Growth Theory.- Monetaryl(