In this Book
- Macroeconomics in Times of Liquidity Crises: Searching for Economic Essentials
- Book
- 2016
- Published by: The MIT Press
summary
Since the subprime mortgage crisis that began in 2007, advanced economies have felt a nagging sense of insecurity. In parallel, the profession has witnessed phenomena that are alien to mainstream macroeconomic models. Financial crises are systemic, occurring simultaneously in different economies. In this book, Guillermo Calvo focuses on liquidity factors as a commonality in financial crises. Specifically, he examines the role of “liquidity crunch” in triggering crises. He also identifies a fundamental (but overlooked) idea in Keynes’s General Theory, termed by Calvo the price theory of money, to rationalize the resiliency of the U.S. dollar when other dollar-backed assets suffered a devastating liquidity crunch.
Calvo shows that a sharp focus on liquidity reveals some characteristics of liquid assets that are easy to miss otherwise. He argues for liquidity’s centrality, presenting what he calls the Liquidity Approach. He shows that simple extensions of standard monetary models help rationalize the implications of the liquidity crunch, and then examines slightly more technical models that highlight liquidity issues. He explores the empirical effects of liquidity crunch by studying systemic system stops (of capital inflows), presuming that they are triggered by liquidity crunch-type phenomena.
Table of Contents
Download Full Book
- Introduction
- pp. xv-xxii
- I: Toward the Liquidity Approach
- II: Emerging Market Crises through the Lens of the Liquidity Approach
- Introduction to Part II
- pp. 111-116
- Appendix Tables
- pp. 173-194
- References
- pp. 217-232
Additional Information
ISBN
9780262336017
Related ISBN(s)
9780262035415
MARC Record
OCLC
962064929
Pages
192
Launched on MUSE
2016-11-06
Language
English
Open Access
No