Fragile New Economy

@inproceedings{Li2015FragileNE,
  title={Fragile New Economy},
  author={Ye Li},
  year={2015}
}
This paper provides a dynamic general equilibrium model to explain the secular upward trends in corporate liquidity holding and financial-sector risk-taking in the past few decades. The structural transformation to an intangible-intensive "new economy" results in increased corporate liquidity demand, because intangibleintensive investments require internal liquidity due to limited pledgeability. By issuing safe debt held by the non-financial sector, the financial sector supplies liquidity and… CONTINUE READING

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