Macroeconomics: Theory and Policy

15

Demand for Money: The Post-Keynesian Approach

After studying this topic, you should be able to understand

• The post Keynesian theories like the portfolio theories lay emphasis on the store of value function of money.
• The transactions theories lay more emphasis on the medium of exchange function of money.
• The Baumol-Tobin model of transactions demand for money lays stress on the fact that the holding of money by the individual transactor in his asset portfolio involves both a cost and a benefit.
• Friedman’s theory of demand for money is partly Keynesian and partly non-Keynesian.
• Friedman ignores the motives for holding money and takes it for granted that people will certainly hold money.

INTRODUCTION

As already discussed in Chapter 14 that ...