Liquid Capital and Market Liquidity

  title={Liquid Capital and Market Liquidity},
  author={Timothy C. Johnson},
Liquidity, as a description of an agent’s asset holdings, refers to the ease with which these assets can be converted directly to goods and services. As a description of market conditions, liquidity refers to the willingness of agents to accomodate the trading needs of others. This paper views the former notion as a technological property of real assets and the latter as an endogenous property of financial equilibrium, and describes a channel by which the two are linked. When agents hold more… CONTINUE READING

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