T HE theory of the demand for financial assets has come in for a good deal of discussion in the last few years. Undoubtedly the discussion has been fruitful and has given us many new insights into the nature of financial processes. But it cannot be said that there is any generally agreed upon view as to the way in which those processes work. It would be appropriate at a conference of this kind to review the different hypotheses and give a systematic summary of the present state of knowledge. Unfortunately, though I have read the literature assiduously I have found it rather indigestible. I do not feel prepared to give a fair summary of other people's views. I must fall back therefore on giving my own. In this paper I shall deal with the demand for liquid assets and money by households and corporations. Those two groups hold over twothirds of all liquid assets, and the same general approach though not the details can probably be applied to the demands of unincorporated businesses, farmers, state and local governments. In dealing with the demand for liquid assets we must at least implicitly deal with the demand for other types of assets, but I shall not, except incidentally, say anything in detail about the demand for stocks, bonds, or physical assets. I shall confine myself to the demand for currency, demand deposits, commercial bank time deposits, mutual savings bank deposits, savings and loan shares, savings bonds, and short-term federal securities. There are, of course, other liquid assets, but I shall have little to say about them. I have occasionally used the term money in the sense of demand deposits and currency but have usually referred to those assets specifically to avoid any confusion with other definitions of money. But though I am happy to try to avoid the semantic confusion involved in arguments about whether any particular asset should be included under the heading money, I do cling to the view that commercial bank time deposits are significantly different from demand deposits. For that matter, so is currency, and so perhaps we ought to dispense with the term money in theoretical discussions and say clearly what we mean. In the first section of the paper I have discussed very briefly the conditions under which liquid assets are supplied. There follow in section 2 a discussion of corporate motives for holding liquid assets and money and a review of some empirical evidence on the relative importance of various factors influencing corporate decisions. In section 3, this theory of household demand for liquid assets and money is discussed together with some empirical evidence.

PLANNING for the construction of a new town is in many ways similar to planning the development of an emerging national economy. Both processes may be framed within the context of growth, susceptible to an econometric treatment. The models of Klein and Goldberger, Tinbergen, Koyck and Bos, Harrod, Domar, and others, are well known; but the time seems distant when such sophisticated analyses of national economies can be applied to a local economy. Our paper modestly seeks to narrow this distance by developing and testing an urban growth model. Although the model was conceived for a particular growth problem and for one city, it is no less applicable to more general local development problems such as the construction of new towns. The process of building a new town may be conceptualized in a dynamic programming model which seeks to optimally schedule the allocation of budgeted funds among competing investment needs in such a fashion that the needs, or targets, are satisfied in minimum time. As a corollary, since the capital appropriation is exogenously given to the new town as a continuous increasing single-valued function of time, the targets are attained at minimum cost. The targets are defined as units of physical capacity, which in turn are dichotomized as industrial and service. Finally, because the capital appropriation equates costs, with minimum cost, as well as minimum time, the amount appropriated is also minimized.

AMONG the most elusive magnitudes to ,[_1quantify is the influence of technological change on employment, the reason being that technological change in any context has been difficult to isolate. Clearly, the traditional productivity ratios, such as output per unit of labor input, cannot be used to measure technological employment, since a productivity index embodies, in a seemingly indecomposable manner, the effects of in capital utilized, returns to scale, neutral and non-neutral technological change, and relative factor prices. Thus, in order to construct a measure of technological employment, we need to be able to quantify, at the minimum, the effects of in technology separately from the other forces. Yet, these other forces have meaning in themselves. Therefore, we should like to isolate the effect on the change in employment of in the following: (a) the scale of output, (b) the relative prices of capital and labor (assuming, for simplicity, only two factors), (c) returns to scale, and (d) neutral and non-neutral technology.' The present paper presents a method of measuring the forces (a)-(d) on employment and tests it on data for the private domestic non-farm sector of the United States for the period 1890-1958.2 It does this in such a way as to avoid the problem of the interaction among the forces (a)-(d) -at least to a first-order approximation. Stated differently, our objective is to frame a general method of measurement which permits a quantitative distinction to be drawn between structural changes and demand in terms of their effect on employment.8 Since the method is general, the forces (a)-(d) can be quantified for any subset in the total employed; for example, skilled or unskilled labor, regional unemployment, etc. The only requirement is that we be able to estimate a demand relation for the subset in question. We should like to emphasize the methodological rather than the substantive aspects of this paper for several reasons. The principal reason, though, is that the data, by virtue of their aggregative nature (inter alia), are not suitable to the method we will apply. Also, since the method derives from the micro theory of the firm, it should be applied, at most, to industry data. In what follows, the method is first presented verbally as far as possible. This is followed by a more precise statement of the method which permits a confrontation with data. The empirical measures of the private domestic non-farm sector are then set out and discussed. An appendix embodies a discussion of the data used in the paper.

C URRENT controversy among economists on systems for recording and classifying Government transactions has focused largely on the choice between the Cash Budget on the one hand and the income and product account on the other; the Administrative Budget seems to have few friends in the profession. A good part of the controversy over budget concepts appears to exist mainly because the major types of Federal economic influence are not being distinguished sharply enough in discussion of the currently available measures of Government activities. In particular, GNPdeficit advocates look for the income and spending effects of Federal transactions, while the Cash Budget defenders seem to be looking principally for liquidity and financial market effects. Lending effects, meanwhile, have been largely left out of the discussion; they are usually mentioned only as an intrusive element of the cash deficit relative to income and spending effects. When lending is recognized as a separate and, at times, sizable force in the economy, and when the spending vs. liquidity distinction is kept in mind, we begin to have a basis for deciding which of the Federal budget figures to use in any particular discussion. What is proposed here is a framework within which each of the budget concepts can be integrated but still distinguished, permitting whatever focus of discussion is desired without foreclosing on the benefits of alternative perspectives. The framework is an adaptation of the account for the Federal Government sector in the Flow of Funds national accounting system developed at the Federal Reserve, and now available on a quarterly, seasonally adjusted basis. This adaptation is based on the following premises: first, no single number can possibly tell all or even very much about Federal economic influences, and we need a set of several figures even to begin to see a picture. Second, the accrual version of Federal transactions in income and product accounts tells more of non-financial influences than the cash version. Third, Federal financial transactionsboth lending and borrowing-are important channels through which the Government can and does influence economic developments and should be included explicitly in any accounting of Government activities. Fourth, lending is different from both borrowing and spending in influence and cannot reasonably be combined with either. Fifth, however, simplicity of presentation is essential if any new version of Government accounting is to achieve fairly widespread use. The form shown in the attached chart tries to meet the preferences and objectives stated above. It delineates in a minimum number of lines the major types of Governmental activities as they affect distinctively different types of economic activity: payments for goods and services and for transfers, receipts from tax revenues, Government lending, Government borrowing from the banking system, and borrowing from the public. A. The upper panel of the chart shows the Government's direct contribution to the spending stream and the amount it taps from this stream through taxes. Changes in the gross size and composition of both spending and revenues are at least as important for economic analysis as a net deficit or surplus on any accounting basis and deserve separate reporting. The figures plotted are those in the national income account, that is, they are the accrual version of Government spending and receipts. It would be definitely desirable, if space permitted, to distinguish spending for goods and services from transfer payments and to distinguish personal from business taxes, but as a * Views expressed here are those of the authors, and do not necessarily reflect the views of the Board of Governors of the Federal Reserve System. ressed here are those of the authors, an do sa il reflect the views of the Board of Governors