Households which are not liquidity constrained should exhibit the expected investment response to higher prices.
This point is demonstrated using an equilibrium business cycle model featuring heterogeneous households, endogenous labor supply and liquidity constraints.
That is, t gives the size of the aggregate liquidity shock in period t; higher realizations of t correspond to higher demand for liquid assets.
Any attempt to increase the safety of the means of payment was likely to constrain not only liquidity but credit creation as well.
This means that too low an inflation rate is unsustainable on a steadystate growth path with liquidity-constrained consumers.
Furthermore, he evaluates products which enhance the liquidity or accessibility of funds placed into a variable annuity.
The quick answer is liquidity and counterparty risk.
Such hothouse growth aggravated inflationary pressures, already rising because of excessive monetary liquidity from wartime currency creation and immediate post-war reconstruction.
The second position is that the liquidity of bank portfolios is what they desire, since otherwise they would be changed.
Early banks concentrated foremost on liquidity and secondarily on economic development.
For the non liquidity-constrained households, the decrease in current income will lead to a small decrease in permanent income.
Though the liquidity effect is not entirely transient, the output effects of monetary shocks outlast the interest-rate effects.
In this case, higher inside liquidity is accompanied by more specialization.
Liquidity is important in our model because risk-averse individuals have an incentive to smooth consumption over earnings and employment shocks.
As noted, even traditional liquidity risks can be handled at lower cost by use of derivatives.
These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.
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