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The Demand of Liquid Assets with Uncertain Lumpy Expenditures

Fernando Alvarez and Francesco Lippi

No 18152, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We consider an inventory model for a liquid asset where the per-period net expenditures have two components: one that is frequent and small and another that is infrequent and large. We give a theoretical characterization of the optimal management of liquid asset as well as of the implied observable statistics. We use our characterization to interpret some aspects of households' currency management in Austria, as well as the management of demand deposits by a large sample of Italian investors.

JEL-codes: E41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2012-06
Note: EFG
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Published as Alvarez, Fernando & Lippi, Francesco, 2013. "The demand of liquid assets with uncertain lumpy expenditures," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 753-770.

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Journal Article: The demand of liquid assets with uncertain lumpy expenditures (2013) Downloads
Working Paper: The demand of liquid assets with uncertain lumpy expenditures (2013) Downloads
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