This essay surveys the new monetarist approach to liquidity. Work in this literature strives for
empirical and policy relevance, plus rigorous foundations. Questions include: What is …

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 …

Abstract Information about asset quality is often not disclosed to asset markets. What
principles determine when a financial regulator should disclose or withhold information? We …

Are financial intermediaries–in particular, banks–inherently unstable or fragile, and if so,
why? We address this theoretically by analyzing whether model economies with financial …

Many economists assume that safer assets are more liquid, and some have practically used
“safe” and “liquid” as synonyms. But these terms are not synonyms, and mixing them up can …

This paper studies a model of endogenous bank opacity. Why do banks choose to hide their
risk exposure from the public? And should policy makers force banks to be more …

We propose a new model of the macroeconomy which is simple and tractable, yet explicit
about the foundations of liquidity. Monetary policy is implemented via swaps of money for …

A consistent empirical feature of bond yields is that term premia are, on average, positive.
The majority of theoretical explanations for this observation have viewed the term premia …

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 …

We study asset liquidity in a model where financial assets can be liquidated for money in
over-the-counter (OTC) secondary markets, in response to random liquidity needs. Traders …