We adapt the (Sidrauski, 1967) monetary model to study the hypothesis of anticipation of future consumption. We assume that anticipation of future consumption affects an agent's instantaneous utility and that all effects of future consumption on current wellbeing are captured by the stock of...

We derive a very general ("Janus") money demand function, which reflects backward and forward-looking habit formation. This generality offers an explanation for the breakdown of money-demand functions and policy relevance of monetary aggregates. Integrating our Janus money demand into a...