The optimum quantity of money and the interrelationship between financial markets and intermediaries
Keywords:Optimum quantity of money, brokerage costs, securities markets, policy, financial markets, intermediaries
The discussion of the optimum quantity of money by several prominent economists has led to a reexamination of the fundamental role of money in an economy. The present note is concerned with two related consequences of achieving the optimum quantity of money: the impact on brokerage costs and the impact on the existence of securities markets. This is followed by a discussion on the alternative specifications of an optimum quantity of money policy. The author then turns to analyse the relationship between optimum money balances, financial markets and financial intermediaries.
JEL: E44, E52