Money in General Equilibrium Models
نویسنده
چکیده
This essay describes and critically evaluates the important features of some approaches to the problem of incorporating money in general equilibrium models and ensuring a positive demand for money. The types of approaches considered are introducing money into the utility function, and modelling the transactions demand for money through the use of cash-in-advance constraints, real resource costs, search theory and imperfect information. The approaches based on search theory and imperfect information are found to be the most satisfactory from a general equilibrium point of view, however they are less straightforward to implement analytically and perhaps can only serve as motivation for the other approaches.
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