The Library
Liquidity when it matters : QE and Tobin's q
Tools
Driffill, J. and Miller, M. A. (2013) Liquidity when it matters : QE and Tobin's q. Oxford Economic Papers, Volume 65 (Supplement 1). pp. 115-145. doi:10.1093/oep/gps053 ISSN 0030-7653.
Research output not available from this repository.
Request-a-Copy directly from author or use local Library Get it For Me service.
Official URL: http://dx.doi.org/10.1093/oep/gps053
Abstract
The model of credit-constrained investors developed by Kiyotaki and Moore is used to analyse ‘unconventional monetary policy’ actions taken in the US and UK. We make two contributions. The first is expositional—to show that their model of a liquidity crisis can be represented as a two-equation dynamic system in K (the aggregate capital stock) and q (Tobin’s q, the price of capital goods) with saddle-point dynamics. This allows for an intuitive, graphical exposition of the issues and results. The second is to show how a liquidity crisis leads to a deep recession when the assumption of perfect wage and price flexibility is replaced by downwardly rigid wages and prices. As in Del Negro et al., we show how central bank policies to increase liquidity can ameliorate the recession: but we use our simplified model for the purpose. Further, we analyse how fiscal intervention can help combat recession.
Item Type: | Journal Article | ||||
---|---|---|---|---|---|
Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | Oxford Economic Papers | ||||
Publisher: | Oxford University Press | ||||
ISSN: | 0030-7653 | ||||
Official Date: | April 2013 | ||||
Dates: |
|
||||
Volume: | Volume 65 | ||||
Number: | Supplement 1 | ||||
Page Range: | pp. 115-145 | ||||
DOI: | 10.1093/oep/gps053 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Related URLs: |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |