Liquidity Preference as Behavior towards Risk

  title={Liquidity Preference as Behavior towards Risk},
  author={James Tobin},
  journal={The Review of Economic Studies},
  • J. Tobin
  • Published 1 February 1958
  • Economics
  • The Review of Economic Studies
One of basic functional relationships in the Keynesian model of the economy is the liquidity preference schedule, an inverse relationship between the demand for cash balances and the rate of interest. This aggregative function must be derived from some assumptions regarding the behavior of the decision-making units of the economy, and those assumptions are the concern of this paper. 

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