Dornbusch Sticky Price (Overshooting) model
The equations you have are equilibrium conditions, while derivation (of course) starts with the demand equation and sets demand equal to supply. Then:


$\varphi$ ($0&lt;\varphi&lt;1$) is the income elasticity of money demand - the responsiveness of demand with respect to income
$-\lambda$ ($-\lambda &lt;0$) is the interest rate semi-elasticity of money demand - the responsiveness of demand to the change in interest rates.


Semi-elasticity means that we care how much Y changes in percentages when we increase $X$ by one (increase by one, not by one percentage point).