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Turnover Liquidity and the Transmission of Monetary Policy

Author

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  • Lagos, Ricardo

    (Federal Reserve Bank of Minneapolis)

  • Zhang, Shengxing

    (London School of Economics)

Abstract

We provide empirical evidence of a novel liquidity-based transmission mechanism through which monetary policy influences asset markets, develop a model of this mechanism, and assess the ability of the quantitative theory to match the evidence.

Suggested Citation

  • Lagos, Ricardo & Zhang, Shengxing, 2016. "Turnover Liquidity and the Transmission of Monetary Policy," Working Papers 734, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmwp:734
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    References listed on IDEAS

    as
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    Cited by:

    1. Ricardo Lagos & Shengxing Zhang, 2019. "A Monetary Model of Bilateral Over-the-Counter Markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 33, pages 205-227, July.
    2. Guillaume Rocheteau & Lucie Lebeau & Tai-Wei Hu & Younghwan In, 2018. "Gradual Bargaining in Decentralized Asset Markets," Working Papers 181904, University of California-Irvine, Department of Economics.

    More about this item

    Keywords

    Asset prices; Liquidity; Monetary policy; Monetary transmission;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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