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Financial Market Liquidity and the Financial Crisis: An Assessment Using UK Data

Listed author(s):
  • Christopher Martin
  • Costas Milas

A steady increase in financial market liquidity followed by a rapid reduction played a central role in the financial crisis that began in 2007. We present empirical evidence that the marked rise in liquidity in 2001–07 was due to large and persistent current account deficits and loose monetary policy.

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File URL: http://hdl.handle.net/10.1111/j.1468-2362.2010.01269.x
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Article provided by Wiley Blackwell in its journal International Finance.

Volume (Year): 13 (2010)
Issue (Month): 3 (Winter)
Pages: 443-459

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Handle: RePEc:bla:intfin:v:13:y:2010:i:3:p:443-459
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  1. Dibooglu, Selahattin & Enders, Walter, 2001. "Do Real Wages Respond Asymmetrically to Unemployment Shocks? Evidence from the U.S. and Canada," Journal of Macroeconomics, Elsevier, vol. 23(4), pages 495-515, October.
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  6. Costas Milas, 2009. "Does high M4 money growth trigger large increases in UK inflation? Evidence from a regime-switching model," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 168-182, January.
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  16. repec:fip:fedgsq:y:2010:x:4 is not listed on IDEAS
  17. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
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