The paper reconstructs the origins of the quantity theory of money and its applications. Against the background of the history of money, it is shown that the theory was flexible enough to adapt to institutional change and thus succeeded in maintaining its relevance. To this day, it is useful as an analytical framework. Although, due to Goodhart's Law, it now has only limited potential to guide ...

Article history: Received 5 August 2012 Accepted 26 August 2012 Available online 7 September 2012 This paper investigates the effect of house money on the risk taking behavior of individual investors. When gains are more substantial, individuals tend to take greater risk. The house money effect seems to decline over time because the propensity for risk taking following gains is diminished with ...

Article history: Received 8 September 2007 Received in revised form 9 April 2008 Accepted 17 July 2008 Available online 7 August 2008 A random-matching model with a clearinghouse is constructed to investigate the impact of privatemoney on economic efficiency and social welfare in threemonetary regimes. A subset of agents, called bankers, whose credit histories are recorded by the clearinghouse,...

Previous option pricing research typically assumes that the risk-free rate or the short rate is constant during the life of the option. In this study, we incorporate the stochastic nature of the short rate in our option valuation model and derive explicit formulas for European call and put options on a stock when the short rate follows the Merton model. Using our option model as a benchmark, ou...

Even though theorists acquiesce to the liquidity effect as a theoietical proposition, it is often challenged on efficacy grounds. It is argued that changes in the money stock do not leave all other things unchanged. Monetarists, such as Friedman (1968) assert that the liquidity effect is, at best, only temporary; the ultimate effect of more rapid money growth is higher inflation (or, mom-c impo...

Many past studies documented a strong evidence of a linkage between stock prices and macroeconomic activities across different stock markets and time horizons. However, most of these studies have focused on developed economies and highlighted the impact of either domestic variables or a few global factors. In recent times, the impact of global macroeconomic factors upon stock returns has garner...

the exchange rate unification is one of the most important instruments of economic adjustment, which is used in many countries. this paper shows the effects of the exchange rate unification on price level (inflation), gross domestic production (gdp), non-oil exports, private conception, government expenditure and stock of money. the data, is used related to the period 1959-2000. to analyze the ...

in this paper, we develop an inventory model with delay in payments for deteriorating items. in our model, retailer who purchases the items enjoys a fixed credit period offered by his/her supplier and, in turn, also offers a credit period to his/her customers in order to promote the market competition. the demand is assumed to be linear function of the retailer's current-stock level. the effect...

One of the most important duties of financial economy is modeling and forecasting the volatilities of price of risky assets. From analysts and policy makers’ view, price volatility is a key variable contributing to perception of market volatilities. Therefore, analysts need to have an appropriate of forecast of price volatility as a necessary input to perform duties such as risk management, por...

THE CONCEPT OF THE OPTIMAL MONEY STOCK The concept of the optimal stock of money introduced by Milton Friedman (1969) has stimulated much discussion and controversy. More recently, Lucas (1994) has provided new estimates of the welfare gain for the American economy from setting the optimal level of real cash balances. Before turning to a critique of Lucas, let us provide a rationale for this co...