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Liquidity in Frictional Asset Markets

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  • GUILLAUME ROCHETEAU
  • PIERRE‐OLIVIER WEILL

Abstract

On November 14–15, 2008, the Federal Reserve Bank of Cleveland hosted a conference on “Liquidity in frictional asset markets.” In this paper, we review the literature on asset markets with trading frictions in both finance and monetary theory using a simple search‐theoretic model, and we discuss the papers presented at the conference in the context of this literature. We will show the diversity of topics covered in this literature, for example, the dynamics of housing and credit markets, the functioning of payment systems, optimal monetary policy and the cost of inflation, the role of banks, the effect of informational frictions on asset trading.

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  • Guillaume Rocheteau & Pierre‐Olivier Weill, 2011. "Liquidity in Frictional Asset Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(s2), pages 261-282, October.
    • Handle: RePEc:wly:jmoncb:v:43:y:2011:i:s2:p:261-282
    DOI: 10.1111/j.1538-4616.2011.00435.x
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