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2.1 Introduction
To employ DSGE to explore monetary issues we need positive demand for money.
Three ways to model the demand for money (MIU, transaction costs, money used for transfer of resources).
MIU can: 1) examine relationships between money and prices, 2) examine effects of inflation on equilibrium
quantities, 3) help in choosing optimal inflation rate.
The point of doing MIU is to have a model in which people hold money in equilibrium and thus we can exploit the
effects of money on the economy.
2.2.4 Limitations
Generate the role for money by assumption, dont know partial derivatives.
2.5.4 Calibration