This paper develops a model of the public and private provision of liquidity and its relation to unemployment. We … a result, the real interest rate is endogenous and depends on the financing needs of firms, the liquidity needs of OTC …-traders, and the public supply of liquidity. We show that under some conditions the policymaker faces a trade-off between the …

The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory …

We study the efficiency of liquidity provision by dealers and the desirability of policy intervention in over …. In this context, dealers can provide liquidity to investors by accumulating asset inventories. When OTC frictions are …

borrowing limits depend on the sophistication of the financial system, the frequency of liquidity shocks, and the rate of return …

the usefulness of at money. The liquidity of the real asset, as measured by its transaction velocity, is shown to depend …

, and standard measures of liquidity. To this end, we analyze the equilibrium and optimal allocations of a search …, these nonmonotonicities give rise to an externality in liquidity provision that can lead to multiple equilibria. Tight …

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 …

We study the efficiency of dealers' liquidity provision and the desirability of policy intervention in over …-the-counter (OTC) markets during crises. Our theory emphasizes two key frictions in OTC markets: finding counterparties takes time, and …' asset demands that lasts until a random recovery time. In this context, dealers can provide liquidity to outside investors …