Turnover Liquidity and the Transmission of Monetary Policy
We provide empirical evidence of a novel liquidity-based transmission mechanism through which monetary policy influences asset markets, develop a model of this mechanism, and assess the ability of the quantitative theory to match the evidence.
Lagos is thankful for the support from the C.V. Starr Center for Applied Economics at NYU, and for the hospitality of Princeton University, University College London, the University of Minnesota, and the Federal Reserve Bank of Minneapolis. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Zhang is thankful for the support from the Centre for Macroeconomics at LSE, the British Academy/Leverhulme Small Research Grant, and for the hospitality of the University of Pennsylvania and New York Fed. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
New York University is my primary employer. In addition, I have occasional consulting or teaching arrangements with a number of other institutions. During the last five years, the following institutions have paid me or given me grants or in-kind support valued cumulatively at more than $10,000.
Bank of Canada
Central Bank of the Republic of Armenia
Federal Reserve Bank of Minneapolis
Journal of Economic Theory (Elsevier)
Universidad Torcuato Di Tella
University College London
University of Minnesota
Ricardo Lagos & Shengxing Zhang, 2020. "Turnover Liquidity and the Transmission of Monetary Policy," American Economic Review, vol 110(6), pages 1635-1672. citation courtesy of