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2002 Lawrence R. Klein Lecture Liquidity And Asset Prices

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  • Nobuhiro Kiyotaki
  • John Moore

Abstract

We broadly define liquid assets, or monetary assets, as any asset that can be readily sold in the market and can be held by a number of people in succession before maturity. We ask in what environment is the circulation of liquid assets essential for the smooth running of the economy. By developing a canonical model of a monetary economy (i.e., where the circulation of liquid assets is essential), we are able to examine the interaction between liquidity, asset prices, and aggregate economic activity. Copyright 2005 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

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  • Nobuhiro Kiyotaki & John Moore, 2005. "2002 Lawrence R. Klein Lecture Liquidity And Asset Prices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 317-349, May.
  • Handle: RePEc:ier:iecrev:v:46:y:2005:i:2:p:317-349
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    Cited by:

    1. Han, Han, 2015. "Over-the-Counter Markets, Intermediation, and Monetary Policy," MPRA Paper 68709, University Library of Munich, Germany.
    2. Russell Wong & Cathy Zhang & Guillaume Rocheteau, 2017. "Lending Relationships, Banking Crises and Optimal Monetary Policies," 2017 Meeting Papers 152, Society for Economic Dynamics.
    3. Randall Wright & Cathy Zhang & Guillaume Rocheteau, 2016. "Corporate Finance and Monetary Policy," 2016 Meeting Papers 97, Society for Economic Dynamics.
    4. Branch, William A. & Petrosky-Nadeau, Nicolas & Rocheteau, Guillaume, 2016. "Financial frictions, the housing market, and unemployment," Journal of Economic Theory, Elsevier, vol. 164(C), pages 101-135.
    5. Kollmann, Robert & Enders, Zeno & Müller, Gernot J., 2011. "Global banking and international business cycles," European Economic Review, Elsevier, vol. 55(3), pages 407-426, April.
    6. Chao He & Randall Wright & Yu Zhu, 2015. "Housing and Liquidity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 435-455, July.
    7. Bignon, Vincent & Jobst, Clemens, 2017. "Economic Crises and the Eligibility for the Lender of Last Resort: Evidence from Nineteenth Century France," CEPR Discussion Papers 11737, C.E.P.R. Discussion Papers.
    8. Hendrickson, Joshua R. & Salter, Alexander William, 2016. "Money, liquidity, and the structure of production," Journal of Economic Dynamics and Control, Elsevier, vol. 73(C), pages 314-328.
    9. Jobst, Clemens & Bignon, Vincent, 2017. "Economic crises and the eligiblity for the lender of last resort: evidence from 19th century France," Working Paper Series 2027, European Central Bank.
    10. Williamson, Stephen D., 2016. "Scarce collateral, the term premium, and quantitative easing," Journal of Economic Theory, Elsevier, vol. 164(C), pages 136-165.
    11. Kiyotaki, Nobuhiro & Lagos, Ricardo & Wright, Randall, 2016. "Introduction to the symposium issue on money and liquidity," Journal of Economic Theory, Elsevier, vol. 164(C), pages 1-9.
    12. Kai Li & Fang Yang & Hengjie Ai, 2015. "Financial Intermediation and Capital Reallocation," 2015 Meeting Papers 429, Society for Economic Dynamics.
    13. Fuhrer, Lucas Marc & Müller, Benjamin & Steiner, Luzian, 2017. "The Liquidity Coverage Ratio and security prices," Journal of Banking & Finance, Elsevier, vol. 75(C), pages 292-311.
    14. H. Dewachter & G. de Walque & M. Emiris & P. Ilbas & J. Mitchell & R. Wouters, 2012. "Endogenous financial risk : The seventh international conference of the NBB," Economic Review, National Bank of Belgium, issue iii, pages 135-146, December.
    15. Marcelo Bianconi & Joe Akira Yoshino, 2015. "Firm value, investment and monetary policy," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 5(3), pages 262-289.
    16. Miao, Jianjun & Wang, Pengfei, 2014. "Sectoral bubbles, misallocation, and endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 53(C), pages 153-163.
    17. Maximilian Podstawski & Anton Velinov, 2016. "The State Dependent Impact of Bank Exposure on Sovereign Risk," Discussion Papers of DIW Berlin 1550, DIW Berlin, German Institute for Economic Research.

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