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Three Liquid Assets

Author

Listed:
  • Nicola Amendola

    (Università di Roma Tor Vergata, Italy)

  • Lorenzo Carbonari

    (Università di Roma Tor Vergata, Italy)

  • Leo Ferraris

    (Università di Milano-Bicocca, Italy)

Abstract

We examine a theoretical model of liquidity with three assets - money, government bonds and equity- that are used for transaction purposes. Money and bonds complement each other in the payment system. The liquidity of equity is derived as an equilibrium outcome. Liquidity cycles arise from the loss of confidence of the traders in the liquidity of the system. Both open market operations and credit easing play a beneficial role for different purposes.

Suggested Citation

  • Nicola Amendola & Lorenzo Carbonari & Leo Ferraris, 2021. "Three Liquid Assets," Working Paper series 21-14, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:21-14
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Money; Bonds; Equity; Liquidity; Credit Easing;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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    This paper has been announced in the following NEP Reports:

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