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Working Paper

Liquidity in Frictional Asset Markets

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On November 14-15, 2008, the Federal Reserve Bank of Cleveland hosted a conference on “Liquidity in Frictional Asset Markets.” In this paper we review the literature on asset markets with trading frictions in both finance and monetary theory using a simple search-theoretic model, and we discuss the papers presented at the conference in the context of this literature. We will show the diversity of topics covered in this literature, e.g., the dynamics of housing and credit markets, the functioning of payment systems, optimal monetary policy and the cost of inflation, the role of banks, and the effect of informational frictions on asset trading.
Topics
Monetary policy
01.19.2011ISSN 2573-7953 WP 11-05DOI 10.26509/frbc-wp-201105

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Rocheteau, Guillaume, and Pierre-Olivier Weill. 2011. “Liquidity in Frictional Asset Markets.” Federal Reserve Bank of Cleveland, Working Paper No. 11-05. https://doi.org/10.26509/frbc-wp-201105