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On the Instability of Private Intertemporal Liquidity Provision

Lookup NU author(s): Dr Diemo DietrichORCiD

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Abstract

We establish that the provision of intertemporal liquidity is fundamentally prone to instability. Not only are banks subject to coordination failures but also asset markets are inherently unstable. These findings challenge the notion of optimal private provision of liquidity.

Publication metadata

Author(s): Dietrich D, Gehrig T

Publication type: Article

Publication status: Published

Journal: Economics Letters

Year: 2021

Volume: 209

Print publication date: 01/12/2021

Online publication date: 12/10/2021

Acceptance date: 08/10/2021

Date deposited: 14/10/2021

ISSN (print): 0165-1765

ISSN (electronic): 1873-7374

Publisher: Elsevier BV

URL: https://doi.org/10.1016/j.econlet.2021.110117

DOI: 10.1016/j.econlet.2021.110117

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