The transversality condition on government debt requires a zero limit of discounted future debt. The paper shows that, in a stochastic economy, the relevant discount rate depends on the probability distribution of future debt over states of nature. Discount rates on future government debt,...

This paper shows how a cash-in-advance model of money can be written in a way that combines a simple, yet empirically defensible, money demand function with an asset pricing equation that is similar to the standard barter-economy Euler equations. Return premia are determined as in the barter...