Safe Assets’ Scarcity, Liquidity and Spreads

Chiesa, Gabriella (2014) Safe Assets’ Scarcity, Liquidity and Spreads. Bologna: Dipartimento di Scienze economiche DSE, p. 34. DOI 10.6092/unibo/amsacta/3978. In: Quaderni - Working Paper DSE (927). ISSN 2282-6483.
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Abstract

This paper constructs a simple general equilibrium model to analyse the interactions between the financial and the real sector in an environment where liquidity holdings is an input of the credit/investment process. The supply of liquidity is constrained in that income pledgeability limits inside liquidity, and not all sovereign debt is safe/liquid. We pin down the determinants of liquidity/collateral premia and bond spreads, and with reference to the eurozone: (i) the implications of the ECB’s policies on liquidity provision and credit, and (ii) the debt management policy that would increase welfare with no need for transfer payments.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Chiesa, Gabriella
Keywords
Safe assets, Liquidity, Credit, Sovereign debt spreads
Subjects
ISSN
2282-6483
DOI
Deposit date
28 Feb 2014 08:59
Last modified
31 Mar 2014 08:41
URI

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