on asset prices and financial liquidity. The theory predicts asset prices carry a speculative premium that reflects the … asset's marketability and depends on monetary policy and the market microstructure where it is traded. These liquidity …

prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to … monetary policy as well as the microstructure of the market where it is traded. These liquidity considerations imply a positive … anomalous. The theory also exhibits rational expectations equilibria with recurring belief driven events that resemble liquidity …

We study the efficiency of dealers' liquidity provision and the desirability of policy intervention in over …' asset demands that lasts until a random recovery time. In this context, dealers can provide liquidity to outside investors …

We study the dynamics of liquidity provision by dealers during an asset market crash, described as a temporary negative …, persistence) under which dealers provide liquidity to investors following the crash. We also characterize the conditions under … which dealers incentives to provide liquidity are consistent with market efficiency …