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A Model of Monetary Exchange in Over-the-Counter Markets

Shengxing Zhang () and Ricardo Lagos

No 1242, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a model of monetary exchange in over-the-counter (OTC) markets and use it to study the effects of inflation on asset prices, as well as on standard measures of financial liquidity, such as the size of bid-ask spreads, trade volume, and the incentives of dealers to supply immediacy, both by choosing to participate in the market-making activity, and by holding asset inventories on their own account.

Date: 2013
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
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More papers in 2013 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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