Liquidity Effects and Market Frictions
Scott Hendry () and
DNB Staff Reports (discontinued) from Netherlands Central Bank
The goal of this paper is to tackle two problems in standard limited-par- ticipation models: (1) an interest rate liquidity effect that is not as persist- ent as in the data; and (2) nominal variables that are unrealistically volatile. To address these problems, we introduce nominal wage and price rigidities, as well as portfolio adjustment costs and monopolistically com- petitive firms, to better understand how each of these costs affects the model economy.
Pages: 50 pages
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Journal Article: Liquidity Effects and Market Frictions (2001)
Working Paper: Liquidity Effects and Market Frictions (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:staffs:29
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