Liquid accounts as a store of value and excess capacity
Liquid accounts as a store of value and excess capacity
This paper introduces a theory of money as a store of value through a search friction in the goods market. The novel microfoundation helps reconcile the observed amounts of liquidity holdings, with the presence of credit. It also implies a link between money demand, aggregate demand and equilibrium excess supply which explains the joint behaviour of monetary aggregates and real economic activity. In particular, the model implies an explanation of recessions consistent with the surge in liquidity holdings and drop in production capacity utilization, as documented for several recessions including the financial crisis.
Money, Credit, Equilibrium Excess Supply;
Mennuni, Alessandro
18a3b238-2d5b-4219-8d50-7c87765007a4
25 July 2017
Mennuni, Alessandro
18a3b238-2d5b-4219-8d50-7c87765007a4
Mennuni, Alessandro
(2017)
Liquid accounts as a store of value and excess capacity
Southampton Discussion Papers.
55pp.
Record type:
Monograph
(Working Paper)
Abstract
This paper introduces a theory of money as a store of value through a search friction in the goods market. The novel microfoundation helps reconcile the observed amounts of liquidity holdings, with the presence of credit. It also implies a link between money demand, aggregate demand and equilibrium excess supply which explains the joint behaviour of monetary aggregates and real economic activity. In particular, the model implies an explanation of recessions consistent with the surge in liquidity holdings and drop in production capacity utilization, as documented for several recessions including the financial crisis.
Text
Liquidity_for_submission_08_01_2017
- Author's Original
More information
Published date: 25 July 2017
Keywords:
Money, Credit, Equilibrium Excess Supply;
Identifiers
Local EPrints ID: 420959
URI: http://eprints.soton.ac.uk/id/eprint/420959
PURE UUID: cee1b0b7-027c-4072-9aae-5543c9493297
Catalogue record
Date deposited: 18 May 2018 16:31
Last modified: 15 Mar 2024 19:39
Export record
Contributors
Author:
Alessandro Mennuni
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics