A model is presented to characterise the (optimal) demand for cash balances in deregulated markets. After the model of James Tobin, 1958, net balances are determined in order to maximise the expected return of a certain portfolio combining risk and capital. Unlike the model of Tobin, the prices...

The extent to which central banks are able to anticipate the effects of monetary policy can be assessed within the framework of the liquidity-preference proposition. An actuarial-based theory of liquidity preference is developed in this paper, which extends the traditional framework by...