June 01, 2004
Monetary Economics
Monetary economics is the most challenging area within the discipline. Our usual opening runs into problems right from the start.
It not thought to be reasonable to simply put money in people's utility functions because money only yields utillity in the sense that it can be exchanged for goods. In fact, an n good n prices system really requires only n-1 prices. If one of the goods is taken to be the unit of account (money), then only the other n-1 goods have prices.
Posted by bparke at June 1, 2004 12:21 PM