The assumption in many, if not most, macroeconomic models is that firms do not save but borrow

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The assumption in many, if not most, macroeconomic models is that firms do not save but borrow (through the issue of one-period bonds) each period the funds that they need for investment. Under this assumption, if fiat money is intrinsically useless for firms, its demand by firms will be zero under the rationale of the benchmark OLG model. How, then, can the use of money by firms be generated and be positive in the OLG context?

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Monetary Economics

ISBN: 9780415772099

2nd Edition

Authors: Jagdish Handa

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