Another reason for non-neutrality of financial liquidity
This paper reinterprets the non-neutrality of financial liquidity under a general equilibrium model with multiple financial liquidities, but without price stickiness. Non-neutrality opens the possibility of effective monetary or financial policy on the crisis-prone real economy and thus revisiting i...
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| Format: | Article |
| Language: | English |
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Economists' Association of Vojvodina
2019-01-01
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| Series: | Panoeconomicus |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/1452-595X/2019/1452-595X1800008L.pdf |
| _version_ | 1811338032737943552 |
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| author | Lee Jong-Eun |
| author_facet | Lee Jong-Eun |
| author_sort | Lee Jong-Eun |
| collection | DOAJ |
| description | This paper reinterprets the non-neutrality of financial liquidity under a general equilibrium model with multiple financial liquidities, but without price stickiness. Non-neutrality opens the possibility of effective monetary or financial policy on the crisis-prone real economy and thus revisiting its nature is worthwhile. We find that models with only one asset and money limit our perspectives to see the nature of financial liquidities interacting with real economy. Departing from abstracting an economy with only one interest rate allows us to see the underlying reason of non-neutrality of financial liquidities, that is, industry-specific rates of return distinguishable from the representative rate of return. Without the assumption of price stickiness but with a wider frame of multiple liquidities, this paper offers another reason for non-neutrality of financial liquidity and naturally clarifies the meaning of money neutrality. We incorporate complicated reality of multiple financial liquidities in a theoretical model, which is a way of deepening our understanding of financial market. |
| first_indexed | 2024-04-13T18:04:57Z |
| format | Article |
| id | doaj.art-cb26ce2f49014b209f0e468c6c6a0912 |
| institution | Directory Open Access Journal |
| issn | 1452-595X 2217-2386 |
| language | English |
| last_indexed | 2024-04-13T18:04:57Z |
| publishDate | 2019-01-01 |
| publisher | Economists' Association of Vojvodina |
| record_format | Article |
| series | Panoeconomicus |
| spelling | doaj.art-cb26ce2f49014b209f0e468c6c6a09122022-12-22T02:36:07ZengEconomists' Association of VojvodinaPanoeconomicus1452-595X2217-23862019-01-01661415010.2298/PAN160227008L1452-595X1800008LAnother reason for non-neutrality of financial liquidityLee Jong-Eun0Economics, Sejong University, Seoul, Republic of KoreaThis paper reinterprets the non-neutrality of financial liquidity under a general equilibrium model with multiple financial liquidities, but without price stickiness. Non-neutrality opens the possibility of effective monetary or financial policy on the crisis-prone real economy and thus revisiting its nature is worthwhile. We find that models with only one asset and money limit our perspectives to see the nature of financial liquidities interacting with real economy. Departing from abstracting an economy with only one interest rate allows us to see the underlying reason of non-neutrality of financial liquidities, that is, industry-specific rates of return distinguishable from the representative rate of return. Without the assumption of price stickiness but with a wider frame of multiple liquidities, this paper offers another reason for non-neutrality of financial liquidity and naturally clarifies the meaning of money neutrality. We incorporate complicated reality of multiple financial liquidities in a theoretical model, which is a way of deepening our understanding of financial market.http://www.doiserbia.nb.rs/img/doi/1452-595X/2019/1452-595X1800008L.pdffinancial liquiditynon-neutralitydichotomy |
| spellingShingle | Lee Jong-Eun Another reason for non-neutrality of financial liquidity Panoeconomicus financial liquidity non-neutrality dichotomy |
| title | Another reason for non-neutrality of financial liquidity |
| title_full | Another reason for non-neutrality of financial liquidity |
| title_fullStr | Another reason for non-neutrality of financial liquidity |
| title_full_unstemmed | Another reason for non-neutrality of financial liquidity |
| title_short | Another reason for non-neutrality of financial liquidity |
| title_sort | another reason for non neutrality of financial liquidity |
| topic | financial liquidity non-neutrality dichotomy |
| url | http://www.doiserbia.nb.rs/img/doi/1452-595X/2019/1452-595X1800008L.pdf |
| work_keys_str_mv | AT leejongeun anotherreasonfornonneutralityoffinancialliquidity |