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Predatory trading as a game of size

I asked this question on quant.stackexchange and didn't receive an answer. I was advised to ask here as well. Predatory trading has been addressed in literature frequently. I have read for example ...
Bravarius's user avatar
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What is liquidity of dollars?

I read Russian article about exported inflation and it was written there about liquidity of dollars: In order to reduce national debt of the USA and to stimulate economic growth government of USA ...
Mike_bb's user avatar
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The liquidity of bank's assets and bank's systemic risk

I would have the following question. May the liquidity of a bank's assets be non-linearly related to the bank's systemic risk? More specifically, more liquidity can increase systemic risk during ...
Maurizio Marinaro's user avatar
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2 answers
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Bond Prices, Interest rates, Demand for bonds

I know about the inverse relationship between bond prices and interest rates. However, when we talk about Liquidity Preference Theory, there we mention that an increase in interest rates leads to more ...
festakonik's user avatar
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Effectiveness of liquidty regulation

I am writing to collect some thoughts regarding the best way to study the effectiveness of liquidity regulation (LCR and NSFR). To study the latter, I should avoid to collect actual banks' ratios, ...
Maurizio Marinaro's user avatar
1 vote
1 answer
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Assessing the effectiveness of macroprudential liquidity requirements

I would like to investigate the effectiveness of Basel III Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) in containing systemic risk during crises. As far as I know, a few studies ...
Maurizio Marinaro's user avatar
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0 answers
42 views

Water Economic Metaphor - Evaporation / Condensation

I was considering economics, and how a lot of economics tends to use a water metaphor as a descriptive mechanism. Ex: market liquidity, "investment evaporated", "market flows around ...
G. Putnam's user avatar
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In the Diamond-Dybvig model, why does the long-term investment not offer a liquidity risk premium?

In the basic version of this model (see link below), both the short-term asset (deposit) and the long-term investment (“technology”) are considered to be risk-free (that is, there is only one possible ...
Leonid Konoplev's user avatar
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The Fed's repo amount and TGCR shows positive pearson correlation. How so?

If I understand correctly, repo (https://fred.stlouisfed.org/series/RPONTSYD#0) → easier to borrow and the interest rate decreases → Tri-Party General Collateral Rate (TGCR) decreases → monetary ...
zhlee's user avatar
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What would happen in global bank run

Bank runs are self-amplifying. What would realistically happen if the entire earth would experience a simultaneous bank run?
matthias_buehlmann's user avatar
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1 answer
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Why is a stock chart data different from historical data?

I was analyzing a stock's volume to get the volume peaks of it when I noticed that these peaks are not the same in the stock's chart and historical data. If you analyse this chart (1 month period) ...
Fábio LinharesCPC's user avatar
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Is There an rNPV Model Relating Money Supply, Total Wealth and Money Velocity?

It seems sensible that the supply of constant-value units of fiat money should roughly correspond to the total wealth of the jurisdiction's economy, in the same sense that an on-demand gold ...
James Bowery's user avatar
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592 views

What is liquidity overhang?

I read in an economics article the following: RBI Governor has decided to keep the unwinding of monetary policy gradual, calibrated, and non-disruptive while remaining supportive of the economic ...
Krishan Sai's user avatar
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0 answers
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Liquidity puzzle in the representative household model

In a cash in advance representative household model, the nominal interest rate may be determined by $$\frac{1}{1 + i_t}= βE_t\left(\frac{M_t}{M_{t+1}}\right)$$ where $\beta$ is the discount rate. I'...
An old man in the sea.'s user avatar
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2 answers
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Was there a drop in liquidity in the corporate bond market during the Global Financial Crisis?

It is often said that the increase in the perceived default risk led to a fall in the demand for the corporate bonds. This led to the fall in their prices and hence, their interest rates rose ...
Tan Yong Boon's user avatar
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1 answer
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What's the difference of economic capital and liquidity buffer?

Economic capital is what for example a bank has and uses in order to stay solvent. Isn't this in a way a liquidity buffer? or what would be the difference between them?
curiousTrader's user avatar
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Characteristics of market liquidity

The characteristics of market liquidity, accoridng to Kyle, are tightness of the market, depth of the marekt and resiliency of prices. By referring to tightness, it descriebes the cost of turning ...
Hunger Learn's user avatar
2 votes
2 answers
498 views

What are the effects of liquidity crisis?

What are the actual effects of the lack of liquidity? Economists always say, we need to increase liquidity at a time of recession, but why is liquidity is important for us? Could anyone explain it in ...
curiousTrader's user avatar
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What caused "excess liquidity" in equity market, when CPI was deflationary at the same time period, which caused 'market crash in 1929' in USA?

To begin with, my question is NOT about the reasons of "the great depression" or "market crash" which led to the great depression. Rather, my question is about the reasons for the 'excessive cash ...
invester's user avatar
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1 answer
1k views

What is the difference between the discount window and Fed repos?

I'm wondering how the Fed's discount window differs from it's involvement in the repo market. To the best of my knowledge, both are tools used to conduct monetary policy and both are also short-term, ...
Sylith's user avatar
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How did the massive flight to long-term bonds create a liquidity crisis?

A few weeks ago I noticed that several blogs and such were adamantly proposing that the Fed lower rates immediately by 50 bps. They said that the flight to safety -- to long-term government bonds -- ...
rwjones's user avatar
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4 answers
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What is the difference between microeconomics money and macroeconomics money?

In microeconomics, \$USD are a store of value. I can sell a candy bar for \$1, and I can hang onto that \$1 for a year and then buy the same candy bar for that same \$1. If I print \$1 (and get away ...
Him's user avatar
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1 answer
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At what rate can a multi-billionaire liquidate his assets without significantly affecting the stock price?

Let's consider three different billionaires: Jeff Bezos, Bill Gates and Warren Buffett. Now let's say the three of them (at different times) decided that they want to liquidate all their assets and ...
Abanob Ebrahim's user avatar
1 vote
2 answers
122 views

Initial creation of reserves

I am currently reading the book "Where does money come from?" which is co-authored by Richard Werner after I took the "Money and Banking"-class in coursera by Perry Mehrling. There are certain ...
Mapa's user avatar
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1 answer
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Most profitable conversion of stock into money

When Forbes-lists of top billionaires are published we are usually aghast of their riches and statements such as "the 8 richest people own as much as the poorer half" are disseminated. I was ...
5th decile's user avatar
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What were the liquidity requirements prior to Basel III?

I am investigating the impact of enforcing the Basel III liquidity requirements with a focus on the LCR. I have found some information about regulations in fore prior to Basel III in Sweden and ...
S. Scheibenpflug's user avatar
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1 answer
75 views

How can a crypto currency crash affect liquidity?

To the best of my knowledge, no bank will allow a borrower to provide crypto as collateral for a loan. So, if the price of crypto crashes to zero, there shouldn't be any liquidity issues because no ...
CDM's user avatar
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How did "excess liquidity" in the US contribute to the 2008 crash?

Here I'm using "excess liquidity" not in reference to monetary policy, but to the concentration of capital at the top in regard to private citizens. This excess liquidity, for which the tax cuts in ...
DukeZhou's user avatar
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1 answer
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Wealth - Bond Market and Liquidity Preference Framework

I've been told that an increase in wealth will lead to an increase in both the demand for Bonds determined by the Theory of Asset Demand. This should shift the bond curve to the right, increasing ...
Rain's user avatar
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0 votes
1 answer
466 views

Isn't the liquidity trap about real interest rates?

Here is a so-called thought experiment. Suppose the inflation rate is negative, the nominal interest rate slightly negative, and the real interest rate positive (call it $r$). I think people would ...
ahorn's user avatar
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Effects of variables on the demand for money?

I need verification on my understanding as to whether the following factors affect the demand for money, and if so how they affect it: Changes in Nominal National Income: will affect the transactions ...
tsp216's user avatar
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Limitation on what can be borrowed

Is there a framework for determining the limit of what can be borrowed? For example, lets say an institution with 1 trillion USD wanted to hold 5 trillion USD in government bonds, would there be a ...
CQM's user avatar
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3 votes
2 answers
152 views

"Wealth tax" on illiquid assets, how would people pay

In the idea of a wealth tax, or even for properties taxes, many times assets are illiquid. What mechanisms can be introduced to promote compliance and ensure the revenue collection goals of the taxing ...
CQM's user avatar
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4 votes
3 answers
365 views

Should central bank raise interest rates during a condition of liquidity trap?

I was studying about liquidity traps and understood it fairly well that according to widespread beliefs the monetary policy turns out to be ineffective as nominal interest rates are close to zero and ...
Sub-Optimal's user avatar
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3 votes
1 answer
9k views

Relationship between forward rate, future spot rate, and liquidity preference

I'm getting confused over the relationship between forward rates, spot rates, and liquidity preference. I know that liquidity preference theory (i.e. that investors prefer shorter term investments ...
sir_thursday's user avatar
2 votes
1 answer
192 views

Impact of working capital constraints onto output

I'm looking for empirical evidence (optimally from natural experiments, as described below) of the impact of working capital constraints onto firm output, and the differentials of firm size. I ...
FooBar's user avatar
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4 votes
2 answers
82 views

Literature / Evidence on Cash Hoarding of Firms

I have received anecdotal evidence (heard stories) about many firms hoarding cash (liquid assets) post 2008 and not spending it despite availability of many projects with positive NPV. However, when I ...
FooBar's user avatar
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7 votes
2 answers
417 views

Problem with defining liquidity

I have heard multiple times that a consistent definition of liquidity does not exist. The two wikipedia articles describing liquidity (Market liquidity and accounting liquidity) lack a discussion of ...
jmbejara's user avatar
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