The Demand of Liquid Assets with Uncertain Lumpy Expenditures
AbstractWe consider an inventory model for a liquid asset where the per-period net expenditures have two components: one that is frequent and small and another that is infrequent and large. We give a theoretical characterization of the optimal management of liquid asset as well as of the implied observable statistics. We use our characterization to interpret some aspects of households’ currency management in Austria, as well as the management of demand deposits by a large sample of Italian investors.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18152.
Date of creation: Jun 2012
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Other versions of this item:
- Alvarez, Fernando & Lippi, Francesco, 2013. "The demand of liquid assets with uncertain lumpy expenditures," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 753-770.
- Fernando Alvarez & Francesco Lippi, 2013. "The demand of liquid assets with uncertain lumpy expenditures," EIEF Working Papers Series 1307, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2013.
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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