Liquidity Shocks and Asset Prices in the Business Cycle

Shouyong Shi

Chapter 6 in The Global Macro Economy and Finance, 2012, pp 118-130 from Palgrave Macmillan

Abstract: Abstract Liquidity in the asset market has attracted increasing attention in public debate and academic research, partly because of the recession in 2008 and 2009 in the United States. At the onset of that recession, liquidity suddenly dried up in the asset market. In particular, the market for collateralized debt obligations almost shut down as major financial institutions either had or were perceived to have insufficient funds to meet their contractual obligations. To prevent a complete collapse of the financial market, the US government injected a large amount of liquid assets into the market through various lending facilities which ranged from short-term lending to outright purchases of private equity by the government.

Keywords: Business Cycle; Asset Price; Total Factor Productivity; Private Equity; Equity Market (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-137-03425-0_7

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DOI: 10.1057/9781137034250_7

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