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A Subjectivist Approach to the Demand for Money

A Subjectivist Approach to the Demand for Money Steven Horwitz * 1. Introduction The renewal of interest in subjectivist economics since the mid 1970s has brought with it the opportunity to apply some of its insights to various fields in economics. One area that has been pursued to a significant extent has been the theory of money. Beginning with Carl Menger's 1 theory of money's origin, extending through the contributions of Hutt, Rothbard, White, O'Driscoll, and Selgin2, there appears to be a distinct line of subjectivist monetary theory. Of these contributions however, only the ones of Hutt and Selgin examine what a subjectivist approach to the demand for money might look like. What both emphasize is that the act of holding money provides a subjective utility yield to the holder. The recognition of this subjective yield from money held is important, but more can be said. A subjectivist approach to the demand for money needs also to examine the nature of this yield, compare it to non-money goods, and explore the relevant opportunity costs of holding money. A subjectivist approach can show that the demand for money is not fundamentally different from demanding nonmoney goods. As a result, neoclassical and Keynesian models that portray the only http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal des Économistes et des Études Humaines de Gruyter

A Subjectivist Approach to the Demand for Money

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Publisher
de Gruyter
Copyright
Copyright © 1990 by the
ISSN
2194-5799
eISSN
2153-1552
DOI
10.1515/jeeh-1990-0404
Publisher site
See Article on Publisher Site

Abstract

Steven Horwitz * 1. Introduction The renewal of interest in subjectivist economics since the mid 1970s has brought with it the opportunity to apply some of its insights to various fields in economics. One area that has been pursued to a significant extent has been the theory of money. Beginning with Carl Menger's 1 theory of money's origin, extending through the contributions of Hutt, Rothbard, White, O'Driscoll, and Selgin2, there appears to be a distinct line of subjectivist monetary theory. Of these contributions however, only the ones of Hutt and Selgin examine what a subjectivist approach to the demand for money might look like. What both emphasize is that the act of holding money provides a subjective utility yield to the holder. The recognition of this subjective yield from money held is important, but more can be said. A subjectivist approach to the demand for money needs also to examine the nature of this yield, compare it to non-money goods, and explore the relevant opportunity costs of holding money. A subjectivist approach can show that the demand for money is not fundamentally different from demanding nonmoney goods. As a result, neoclassical and Keynesian models that portray the only

Journal

Journal des Économistes et des Études Humainesde Gruyter

Published: Dec 1, 1990

References