liquidity, I examine the importance of sovereign debt liquidity in a New Keynesian environment with wage rigidities and … liquidity of government bonds has significant detrimental effects on output, employment and investment. A shut down of sovereign … policies taken in 2012 aimed at rising liquidity seem to have prevented a longer and deeper economic downturn …

Price-based liquidity metrics are better in 2013-2014 for small trades and large high-yield bond trades, but not for … relative to 2010-2012. This evidence contrasts with the widely-held view among practitioners that liquidity has worsened …-crisis liquidity could be low when markets are stressed. We consider three stress events: extreme VIX increases, extreme bond yield …