Liquidity Models in Open Economies: Theory and Empirical Evidence

Vittorio Grilli and Nouriel Roubini ()

Working Papers from New York University, Leonard N. Stern School of Business, Department of Economics

Abstract: This paper presents an overview of recent theoretical and empirical reserach on "liquidity models" in open economies; this is a class of optimizing models where money has effects on real asset prices and economic activity without relying on the "ad-hoc" assumption of price/wage stickiness. The non-neutrality of money derives from a temporary segmentation between goods and asset markets. After surveying the theoretical literature on liquidity models, we present empirical evidence based on VAR econometric techniques for the seven major industrial countries. Such evidence is shown to be consistent with the main implications of the liquidity models.

Date: 1995-10
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Liquidity models in open economies: Theory and empirical evidence (1996)
Working Paper: Liquidity Models in Open Economies: Theory and Empirical Evidence (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:ste:nystbu:95-16

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