The buffer stock analysis of the demand for money in Chapter 6 asserted that money acts as

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The buffer stock analysis of the demand for money in Chapter 6 asserted that money acts as a buffer during periods in which economic agents need to adjust their stocks of other goods (commodities, bond and labor) to their optimal levels, but that such adjustments are more costly in the short term than those in money balances. What does this imply for the determination of the interest rate if there exists general equilibrium in all markets?

What does it imply for the dynamic determination of the interest rate while there are buffer stock holdings of money following a shock that changes the desired demands for other goods?

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Monetary Economics

ISBN: 9780415772099

2nd Edition

Authors: Jagdish Handa

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