The OLG model of money: making it more realistic
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The OLG model of money: making it more realistic book
The OLG model arose as a contender to the traditional MIUF-MIPF approach to the role of money in the economy. It would, therefore, seem appropriate to first blend the OLG and cash-in-advance models to determine if their implications would offer an attractive alternative in terms of empirical applicability to the MIUF models. This blend in the context of a T-period model is presented in section 24.1. It is shown that it still has several implausible implications; for example, for the close relationship between saving and the demand for money, limitations on the velocity of money, etc. Therefore, we proceed to the alternative modification of the OLG models of money by introducing money in the utility function.