is shown that when money is a vital form of liquidity to meet uncertain consumption needs, the welfare costs of inflation … inflation tightens liquidity constraints by destroying the buffer-stock value of money, thus raising the volatility of … banking system can reduce the welfare costs of inflation by alleviating liquidity constraints, with realistic credit limits …

allows banks in different regions to smooth local liquidity shocks by borrowing and lending on a world interbank market. We … show under which conditions financial integration induces banks to reduce their liquidity holdings and to shift their … portfolios towards more profitable but less liquid investments. Integration helps reallocate liquidity when different banks are …

fire sales externalities. We model a continuous shock to liquidity demand in each country, which allows us to distinguish … when shocks are large and access to a neighbor's liquidity is denied. This trade-off reduces welfare. We also show that … segmentation only affects crisis probabilities when governments inject public liquidity. Then and only then can segmentation be …