Abstract
This paper studies the Friedman rule on the optimal quantity of money in a money in the utility model with habit formation. If habits are formed only in consumption, or if habit formations in both consumption and real money holdings are symmetric, the Friedman rule is optimal. However, if habit forming is assumed in real money holdings, then the Freidman rule may not be optimal.
Information
Digital Object Identifier: 10.2969/aspm/05310363