Abstract
In any discussion of the demand for money it is important to be clear about the concept of money that is being utilized; otherwise, misunderstandings can arise because of the various possible meanings that readers could have in mind. Here the term will be taken to refer to an economy’s medium of exchange: that is, to a tangible asset that is generally accepted in payment for any commodity. Money thus conceived will also serve as a store of value, of course, but may be of minor importance to the economy in that capacity. The monetary asset will usually also serve as the economy’s medium of account — that is, prices will be quoted in terms of money — since additional accounting costs would be incurred if the unit of account were a quantity of some asset other than money. The medium-of-account role is, however, not logically tied to the medium of exchange (Wicksell, 1906; Niehans, 1978).
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McCallum, B.T., Goodfriend, M.S. (1989). Demand for Money: Theoretical Studies. In: Eatwell, J., Milgate, M., Newman, P. (eds) Money. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-19804-7_13
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