We develop a model where agents can allocate their wealth between a liquid asset, which
can be used to purchase consumption goods, and an illiquid asset, which represents a …

Economists often say that certain types of assets, eg, Treasury bonds, are very 'liquid'. Do
they mean that these assets are likely to serve as media of exchange or collateral (a …

The massive stocks of foreign exchange reserves, mostly held in the form of US T-bonds by
emerging economies, are still an important puzzle. Why do emerging economies continue to …

We study how the strategic interaction of liquid-asset suppliers depends on the financial
market conditions that determine asset liquidity. In our model, two asset suppliers try to profit …

We present a micro-founded monetary model of a small open economy to examine the
behavior of money, prices, and output under the gold standard. In particular, we formally …

A new monetary theory is set out to resolve the “uncovered interest parity (UIP)” puzzle. It
explores the possibility that liquidity properties of money and nominal bonds can account for …

This paper uses a general equilibrium model with collateralized borrowing to show that
increases in risk can have ambiguous effects on leverage, loan margins, loan amounts, and …

A new monetary theory is set out to resolve the" Uncovered Interest Parity (UIP)" Puzzle. It
explores the possibility that liquidity properties of money and nominal bonds can account for …

We develop a monetary model that incorporates over‐the‐counter (OTC) asset trade. After
agents have made their money holding decisions, they receive an idiosyncratic shock that …

This paper examines the effect of monetary policy on the market value of the liquidity
services that financial assets provide, known as the liquidity premium. The theory predicts …