Safe Assets' Scarcity, Liquidity and Spreads

Arbeitspapier

This paper constructs a simple general equilibrium model to analyse the interactions between the financial and the real sector in an environment where liquidity holdings is an input of the credit/investment process. The supply of liquidity is constrained in that income pledgeability limits inside liquidity, and not all sovereign debt is safe/liquid. We pin down the determinants of liquidity/collateral premia and bond spreads, and with reference to the eurozone: (i) the implications of the ECB's policies on liquidity provision and credit, and (ii) the debt management policy that would increase welfare with no need for transfer payments.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Quaderni - Working Paper DSE ; No. 927

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; National Debt; Debt Management; Sovereign Debt ; General Financial Markets: Government Policy and Regulation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chiesa, Gabriella
• Event: Veröffentlichung
• (who): Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
• (where): Bologna
• (when): 2014

Further information

• DOI: doi:10.6092/unibo/amsacta/3978
• Handle: http://hdl.handle.net/10419/159766
• Last update: 10.03.2025, 11:44 AM CET