Liquidity Crises and the Market‐Maker of Last Resort
We study market illiquidity in an economy subject to nonfundamental shocks. Asset trading occurs via decentralized bargaining. The model has multiple rational expectations equilibria; we associate certain Pareto‐inferior equilibria with liquidity crises. The government can improve welfare by acting...
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| Published in: | Journal of money, credit and banking |
|---|---|
| Main Authors: | , , |
| Format: | Journal Article |
| Language: | English |
| Published: |
12.09.2025
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| ISSN: | 0022-2879, 1538-4616 |
| Online Access: | Get full text |
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