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Liquidity, Welfare and Distribution

Samuel Gil Martín ()
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Samuel Gil Martín: Facultad de Economía, Universidad Autónoma de San Luis Potosí, México

Panoeconomicus, 2012, vol. 59, issue 2, 217-234

Abstract: This work presents a dynamic general equilibrium model where wealth distribution is endogenous. I provide channels of causality that suggest a complex relationship between financial markets and the real activity which breaks down the classical dichotomy. As a consequence, the Friedman rule does not hold. In terms of the current events taking place in the world economy, this paper provides a rationale to advert against the perils of an economy satiated with liquidity. Efficiency and distribution cannot thus be considered as separate attributes once we account for the interactions between financial markets and the economic performance.

Keywords: Friedman rule; Idiosyncratic risk; Liquidity (search for similar items in EconPapers)
JEL-codes: E22 E31 E40 (search for similar items in EconPapers)
Date: 2012
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