In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation. This is the environment we study in this paper in order...

In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation. This is the environment we study in this paper in order...

The safety of repurchase agreements (repos) depends on the neoclassical premise that markets are reliable sources of liquidity; repos in practice disprove the theory by generating collateral calls, collateral sales, liquidity events and liquidity-driven losses for repo-borrowing funds and their...

This paper studies the problem of asymmetric information that exists in financial markets between the public and the market makers, that is, the securities dealers who support the stability of asset prices by carrying inventory over short periods of time. Market makers in modern markets...