Arbeitspapier
A tractable model of indirect asset liquidity
Assets have "indirect liquidity" if they cannot be used as media of exchange, but can be traded to obtain a medium of exchange (money) and thereby inherit monetary properties. This essay describes a simple dynamic model of indirect asset liquidity, provides closed form solutions for real and nominal assets, and discusses properties of the solutions. Some of these are standard: assets are imperfect substitutes, asset demand curves slope down, and money is not always neutral. Other properties are more surprising: prices are flexible but appear sticky, and an increase in the supply of indirectly liquid assets can decrease welfare. Because of its simplicity, the model can be useful as a building block inside a larger model, and for teaching concepts from monetary theory.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 15-3
- Classification
-
Wirtschaft
Demand for Money
Money Supply; Credit; Money Multipliers
Monetary Policy
Asset Pricing; Trading Volume; Bond Interest Rates
- Subject
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monetary-search models
asset liquidity
asset prices
monetary policy
- Event
-
Geistige Schöpfung
- (who)
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Herrenbrueck, Lucas
Geromichalos, Athanasios
- Event
-
Veröffentlichung
- (who)
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University of California, Department of Economics
- (where)
-
Davis, CA
- (when)
-
2015
- Handle
- Last update
-
10.03.2025, 11:46 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Herrenbrueck, Lucas
- Geromichalos, Athanasios
- University of California, Department of Economics
Time of origin
- 2015
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