In this paper, we investigate how the dynamic effects of excess liquidity shocks on economic activity, asset prices and … inflation differ over time. We show that the impact varies considerably over time, depends on the source of increased liquidity …

sheets (liquidity effect), banks that depend more on wholesale funding (retail effect) and low-capitalized banks (capital … levels of bank capitalization at the same time mitigate the size, retail and liquidity effects of the policies. The drag on … responded more to the credit support policies of the Eurosystem as a result of more favourable size, retail and liquidity …