confined to project initiation, I find that: (1) when agents expect a liquidity dry-up on such markets, they optimally choose … to self-insure through the hoarding of non-productive but liquid assets; (2) such a response has negative externalities … as it reduces ex-post market participation, which worsens adverse selection and dries up market liquidity; (3) liquidity …

liquidity over incentives. Optimal interventions with commitment call for large, long-term subsidies in excess of what is … required to restore liquidity. …

This paper studies the interaction between adverse selection, liquidity risk and beliefs about systemic risk in … determining market liquidity, asset prices and welfare. Even a small amount of adverse selection in the asset market can lead to … fire-sale pricing and possibly to a market breakdown if it is accompanied by a flight-to-liquidity, a misassessment of …

By analyzing a novel transaction-level dataset, this study reveals the microstructural liquidity dynamics around … scheduled macroeconomic announcements. Specifically, we examine whether investor composition contributes to liquidity … institutions before scheduled macroeconomic announcements impairs market liquidity, implying pre-announcement information asymmetry …

taking into account the endogenous asset supply is crucial. Positive shocks that increase market liquidity and prices … collapse. Government policies also have subtle effects. I show that an increase in government bonds increases total liquidity … policy balances these two effects, requiring more issuances when the liquidity premium is high. I also study transaction …

the liquidity premium are endogenous and depend on the functioning of financial markets as well as the total supply of … assets (private and public). Optimal policy balances the economy's liquidity needs ex-post with the production incentives ex … liquidity improves incentives but implies a higher deadweight loss than private market interventions. Optimal policy does not …