Modelling the interaction of liquidity to price dynamics
- This paper studies the impact of financial liquidity on the macro-economy. We extend a classic macroeconomic modeland compute numerical simulations. The model confirms that persistently low inflation can occur despite a high degreeof financial liquidity due to a reallocation of cash, normal and risk-free bonds. In that regard, our model uncovers anexplanation of a flat Phillips curve. Overall, our approach contributes to a rather disregarded matter in macroeconomictheory.
| Author of HS Reutlingen | Herzog, Bodo |
|---|---|
| URN: | urn:nbn:de:bsz:rt2-opus4-28619 |
| URL: | http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I2-P122.pdf |
| ISSN: | 1545-2921 |
| Erschienen in: | Economics bulletin |
| Publisher: | University of Illinois |
| Place of publication: | Champaign-Urbana, Ill |
| Document Type: | Journal article |
| Language: | English |
| Publication year: | 2020 |
| Volume: | 40 |
| Issue: | 2 |
| Page Number: | 11 |
| First Page: | 1420 |
| Last Page: | 1430 |
| DDC classes: | 330 Wirtschaft |
| Open access?: | Ja |
| Licence (German): |  Creative Commons - CC BY - Namensnennung 4.0 International |
