ABSTRACT
A continuation theory can be constructed from this method by assuming a string of periods all in temporary equilibrium. However, such an analysis
Money, both as a medium of exchange and a store of value, certainly plays a role in temporary equ il ibr i urn, since there are good reasons to hold money balances so as to hedge, or to take advantage of, expected and unexpected oppurtunities in subsequent periods. Hence, even Hayek, one of the staunchest proponents of the 'real' characteristic of interternporal equilibrium, has extended his concept of interternporal equilibrium so as to be able to take into consideration "the desire of people to hold money" (Hayek 1941, p.357). This extension, which looks similar to temporary equilibrium, goes as follows:
"The plans of the various individuals may be compatible with the extent to which they are definite, and yet the individuals may at the same time be uncertain about what will happen after a certain date and may wish to keep some general reserve against whatever may happen in that more uncertain future" (ibid.; cp. Hicks 1965, pp.58-59).
