This paper evaluates two key liquidity policies in the context of financial crises— liquidity requirements and central bank liquidity injections—using a model that includes near-money assets. A trade-off arises between the benefits for financial players subject to liquidity risk and those...

This paper presents a general equilibrium, monetary model of bank runs to study monetary injections during financial crises. When the probability of runs is positive, depositors increase money demand and reduce deposits; at the economy-wide level, the velocity of money drops and deflation...

This paper presents a general equilibrium, monetary model of bank runs to study monetary injections during financial crises. When the probability of runs is positive, depositors increase money demand and reduce deposits; at the economy-wide level, the velocity of money drops and deflation...