Exploring the Dynamics of Global Liquidity

Sally Chen, Philip Liu, Andrea Maechler, Chris Marsh, Sergejs Saksonovs and Hyun Song Shin

No 2012/246, IMF Working Papers from International Monetary Fund

Abstract: This paper explores the concept of global liquidity, its measurement and macro-financial importance. We construct two sets of indicators for global liquidity: a quantity series distinguishing between core and noncore liabilities of financial intermediatires and a corresponding price series. Using price and quantity indicators simultaneously, it is possible to distinguish between shocks to the supply and demand for global liquidity, and isolate their impact on the economy. Our results confirm that global liquidity conditions matter for economic and financial stability, and points to indicators whose regular monitoring could be valuable to policymakers.

Keywords: WP; core liquidity; post crisis; price index; real GDP; Liquidity; core and noncore financial liabilities; shadow banking; growth; demand and supply; liquidity shock; quantity aggregate; demand shock post crisis t-1; demand and supply shock; core liquidity supply shock post crisis t-1; liquidity creation; supply and demand demand shock; liquidity demand shock post crisis t-1; Noncore liquidity quantity aggregate; International liquidity; Supply shocks; Financial statements; Global financial crisis of 2008-2009; Global (search for similar items in EconPapers)
Pages: 47
Date: 2012-10-11
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Citations: View citations in EconPapers (23)

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