 # paper代写-Money demand theory

2019-11-07 | 来源:51Due教员组 | 类别：Paper代写范文

Money demand theory is a theory that studies the motivation, composition and quantity of money demand. Since the 20th century, money demand theory has presented new features compared with the previous money demand theory. The opportunity cost variable is introduced and becomes the determinant of monetary demand, and the determinants of monetary demand are more diversified. More mathematical formulas were used to express economic thoughts, and the introduction of theoretical models made the quantity theory of money more and more perfect and more able to explain real phenomena.

In this stage, the development of money quantity theory experienced three main stages: gammel fisher's modern transaction currency theory, Marshall pigou's cash balance theory, and friedman's modern money quantity theory.

As the pioneer of the quantity theory of money in modern times, gammel established the relationship between money and price with the quantity theory of money, and gave a formula MR=NEP, which was the earliest formula to express the relationship between the quantity of money and price with mathematical tools. Fisher's cash transaction equation is one of the most representative theories of modern money quantity theory. Originally, it was only to demonstrate the relationship between price and money quantity, and then fisher's equation MV=PT was obtained. Then, three determinants of price were obtained, namely, money in circulation, quantity, velocity of money in circulation and quantity of goods. Both gammel and fisher studied the determinants of the amount of money in a society from a macro perspective, that is, the amount of money depends on the needs of the total transaction of goods.

Marshall and pigou, represented by the Cambridge school of economists in the study of money demand question emphatically from the micro perspective, Marshall argued that monetary amount depends on the public demand for the currency, this demand is derived from the public to hold the income gained by the currency and the money used to buy investment profits by weighing, money, money to maintain relations between value and commodity value; Pigou expressed this idea in a mathematical equation and constructed the famous Cambridge equation M=kPY. He believed that the reason for the change of K coefficient lies in the distribution of people's income in investment consumption and the form of money, which further demonstrated the demand for money from the micro perspective.

The differences between the Cambridge equation and fisher's equation are as follows: firstly, they analyzed from different perspectives. Fisher analyzed from a macro perspective while the Cambridge school analyzed from a micro perspective. Secondly, the functions of money are different. Fisher believed that money is to meet the needs of the society for the medium of exchange, reflecting the means of currency circulation and payment. They vary in the amount of variables they contain or imply. Fisher's equation requires money depending on the price, the amount of goods traded, and the velocity of money in circulation, whereas k in the Cambridge equation is affected by many factors.

Friedman, the founder of the monetarist school, created the modern quantity theory of money. From an empirical perspective, he analyzed three kinds of demand factors affecting money and obtained the demand function of money, which were budget constraints, the expected rate of return of money and its assets and the utility of people holding money. The theory will be currency as an asset to the monetary theory into the framework of the portfolio selection theory, abandoned the classical school to see money as pure trading tools narrow point of view, and determine the expected factors in the position in monetary theory and strictly distinguish between the nominal and real variables, and corrected by economists in the study of monetary theory, focus on abstract deductive ignore the disadvantages of empirical research. Friedman's monetary demand function's application in China is remarkable, the function analysis of the main factors of the impact of monetary demand in China are not getting the empirical validation, shows that western empirical results are not suitable for China's national conditions, the reason for altruism is serious in our country, the performance comparison is especially obvious in the intergenerational relationship, the second is the theory of the theory for the microscopic main body scattered research results, did not consider the overall structure and the microcosmic factors influence each other between each other.

On the basis of the money demand motive of the Cambridge school, Keynes made a more detailed analysis on why people hold money, divided the motive of holding money into transaction motive, prudent motive and speculation motive, and initiated speculation motive, which greatly enriched the money demand theory. Keynes believed that the demand for transactional money was determined by income, stable and predictable in the short term, while the demand for speculative money was determined by the level of interest rate, which was difficult to predict. He abandoned the view that only the function of monetary exchange medium was emphasized. For the first time, money is studied as an asset, and liquidity preference selection is the decision of which form to hold a given number of assets. This reflects that Keynesian money demand theory has incorporated money theory into portfolio selection theory.

John Maynard Keynes, the difference between the money demand function and friedman's monetary demand function: in Keynes's interest rate in money demand function is limited to bond yields, earned income at sight, and is relatively stable in the short term, therefore decided to monetary demand is mainly the change of interest rate, currency circulation rate and money demand function is unstable; Friedman's monetary demand function, interest rates, including fixed income securities, the fixed income securities, the yield of all wealth, income is highly stability of permanent income, but also due to lower the interest rate elasticity of money demand, money demand is not sensitive to interest rates, so permanent income is decided the main cause of monetary demand.

New Cambridge school on the basis of the original three money demand motivation motivation to expand to seven, seven motives says there are three kinds of factors which determine affect money demand: income, interest rates and the government's economic policy, venter's cloth is proposed for the first time the government's monetary demand motivation, the motivation is put forward and the analysis to explain in contemporary western countries generally implement different levels of government intervention situation changes in the money demand and its influence is of great practical significance.

Baumol's model and square root law introduce the interest rate into the analysis of the demand for tradable money, demonstrate the view that the demand for tradable money should be influenced by the interest rate, and explain the common phenomenon that people only keep moderate cash for trading and use the temporarily idle part for profit.

Whalen's model demonstrates that the money demand motivated by prevention is a function of interest rate. Through the analysis of baumol model and whalen model, the money demand function of Keynes is extended, which shows that the demand for real money balance is determined by interest rate and income.

On the basis of Keynes, tobin believed that the only form of asset preservation is currency and bond, but the relationship between them is not eith-or-neither, but the relationship between asset portfolio. The change of currency speculative demand is realized by adjusting asset portfolio, and interest rate and future uncertainty are of great significance to currency speculative demand.

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