Liquidity, business cycles, and monetary policy

Nobuhiro Kiyotaki; John Moore

doi:10.1086/701891

Liquidity, business cycles, and monetary policy

Nobuhiro Kiyotaki, John Moore

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

This paper presents a model of a monetary economy where there are differences in liquidity across assets. Money circulates because it is more liquid than other assets, not because it has any special function. The model is used to investigate how aggregate activity and asset prices fluctuate with shocks to productivity and liquidity and to examine what role government policy might have through open-market operations that change the mix of assets held by the private sector.

Original language	English (US)
Pages (from-to)	2926-2966
Number of pages	41
Journal	Journal of Political Economy
Volume	127
Issue number	6
DOIs	https://doi.org/10.1086/701891
State	Published - Dec 1 2019

All Science Journal Classification (ASJC) codes

Economics and Econometrics

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10.1086/701891

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abstract = "This paper presents a model of a monetary economy where there are differences in liquidity across assets. Money circulates because it is more liquid than other assets, not because it has any special function. The model is used to investigate how aggregate activity and asset prices fluctuate with shocks to productivity and liquidity and to examine what role government policy might have through open-market operations that change the mix of assets held by the private sector.",

author = "Nobuhiro Kiyotaki and John Moore",

note = "Funding Information: Shimer, Harald Uhlig, and two anonymous referees for thoughtful comments. We express our special gratitude to Wei Cui for his excellent research assistance. Kiyotaki acknowledges financial support from the US National Science Foundation, and Moore acknowledges financial support from the Leverhulme Trust, the European Research Council, and the UK Economic and Social Research Council.",

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