Liquidity: A New Monetarist Perspective
- (pp. 371-440)
Abstract
This essay surveys the new monetarist approach to liquidity. Work in this literature strives for empirical and policy relevance, plus rigorous foundations. Questions include: What is liquidity? Is money essential in achieving desirable outcomes? Which objects can or should serve in this capacity? When can asset prices differ from fundamentals? What are the functions of commitment and collateral in credit markets? How does money interact with credit and intermediation? What can and should monetary policy do? The research summarized emphasizes the micro structure of frictional transactions, and studies how institutions like monetary exchange, credit arrangements, or intermediation facilitate the exchange process.Citation
Lagos, Ricardo, Guillaume Rocheteau, and Randall Wright. 2017. "Liquidity: A New Monetarist Perspective." Journal of Economic Literature, 55 (2): 371-440. DOI: 10.1257/jel.20141195Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E31 Price Level; Inflation; Deflation
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- E44 Financial Markets and the Macroeconomy
- E52 Monetary Policy
- G10 General Financial Markets: General (includes Measurement and Data)
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages