The Janus model of money demand

João Ricardo Faria and Peter McAdam ()

International Journal of Economic Theory, 2024, vol. 20, issue 3, 334-351

Abstract: We derive a new theoretical model of money demand, which reflects backward‐ and forward‐looking preferences in consumption and utility. The former aspect is captured by standard habit formation, and the latter by anticipation of future consumption preferences. By introducing both of these into the Ramsey–Sidrauski framework, we unveil a new highly general model of money demand. We discuss the model in light of the apparent breakdown of money‐demand functions and diminished policy relevance of monetary aggregates.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:20:y:2024:i:3:p:334-351

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