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Demands for real and financial assets in Botswana

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  • Dee, Philippa S.

Abstract

Traditionally, asset demands are derived as a solution to the individual's or household's problem of allocating wealth among various real and financial alternatives. The demand for each asset depends on the own real rate of return, but also on the real rates of return to alternative assets. The sensitivity to own and cross rates captures the speculative element in portfolio allocation, the motive usually being to maximise end-of-period wealth. Typically, asset demands also depend on income, reflecting the transactions motive for asset holding. These determinants are generally the same, whether the asset choice is seen to take place under conditions of risk or certainty.

Suggested Citation

  • Dee, Philippa S., 1985. "Demands for real and financial assets in Botswana," Kiel Working Papers 244, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:244
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    References listed on IDEAS

    as
    1. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    2. Merton H. Miller & Daniel Orr, 1966. "A Model of the Demand for Money by Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(3), pages 413-435.
    3. Frankel, Jeffrey & Engel, Charles M., 1984. "Do asset-demand functions optimize over the mean and variance of real returns? A six-currency test," Journal of International Economics, Elsevier, vol. 17(3-4), pages 309-323, November.
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