Advanced Search
MyIDEAS: Login

On the Utility of Money

Contents:

Author Info

  • Gancho Todorov Ganchev
Registered author(s):

    Abstract

    The paper studies the concept of utility of money. The latter is defined as the ability to generate additional income. Utility of money is maximized by equalizing dynamic marginal utility of money and marginal cost. The subsequent differential equation links up income velocity of money acceleration and equilibrium convergence. It is proved that individuals’ utility of money maximization objectives may be aggregated at macro level and can be used for monetary policy optimization. Lagrangian multipliers technique is applied to obtain a relationship between income velocity of money and some supplementary constraints. The paper also makes distinction between short-term and long-term utility of money. Conclusions about different types of monetary policies are derived. The Appendix establishes connections with production and investment on the basis of optimal control technique.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ceeol.com/aspx/issuedetails.aspx?issueid=79d70775-a26b-4e48-9694-bd79798c2d45&articleid=e45c12a6-1162-4889-a2c1-702f92d2af22#ae45c12a6-1162-4889-a2c1-702f92d2af22
    Download Restriction: Fee access

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Bulgarian Academy of Sciences - Economic Research Institute in its journal Economic Studies.

    Volume (Year): (2010)
    Issue (Month): 1 ()
    Pages: 32-60

    as in new window
    Handle: RePEc:bas:econst:y:2010:i:1:p:32-60

    Contact details of provider:
    Postal: 3, Aksakov Str., 1040, Sofia
    Phone: (+359 2) 810 40 18
    Fax: (+359 2) 988 21 08
    Email:
    Web page: http://www.iki.bas.bg
    More information through EDIRC

    Related research

    Keywords:

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Reynard, Samuel, 2007. "Maintaining low inflation: money, interest rates, and policy stance," Working Paper Series 0756, European Central Bank.
    2. W A Razzak, 2001. "Money in the era of inflation targeting," Reserve Bank of New Zealand Discussion Paper Series DP2001/02, Reserve Bank of New Zealand.
    3. Carl E. Walsh, 2003. "Monetary Theory and Policy, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232316.
    4. Asheim,G.B. & Weitzman,M.L., 2001. "Does NNP growth indicate welfare improvement?," Memorandum 02/2001, Oslo University, Department of Economics.
    5. Michael D. Bordo & Lars Jonung, 1988. "The Global Velocity Curve 1952-1982," NBER Working Papers 2074, National Bureau of Economic Research, Inc.
    6. Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29 National Bureau of Economic Research, Inc.
    7. Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February.
    8. Gillman, M. & Siklos, P.L. & Silver, J.L., 1997. "Money Velocity with Costly Credit," Working Papers 97-4, Wilfrid Laurier University, Department of Economics.
    9. Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
    10. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2002. "On the Choice of Metrics in Dynamic Welfare Analysis: Utility versus Money Measures," UmeÃ¥ Economic Studies 590, Umeå University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2010:i:1:p:32-60. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diana Dimitrova).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.