This page offers the latest information about workshop series by WINPEC (Waseda Institute of Political Economy).
Macroeconomics
Qingqing Cao
(Michigan State University)
Jan. 30
2023
| Title |
Adverse Selection, Liquidity Shortage, and Government Liquidity Facilities |
| Date |
January 30, 2023 (Monday) 10:40-12:10 |
| Location |
via Zoom |
| Abstract |
I propose a general equilibrium model with asymmetric information in asset quality. The equilibrium features shortage in liquidity and suboptimal investment, the severity of which endogenously responds to aggregate shocks. Government liquidity facilities that issue liquid government bonds to purchase illiquid private assets can alleviate the adverse selection and relax financing constraints. I find large quantitative effects of liquidity facilities on credit market conditions, aggregate investment and output in the Great Recession. |
| Paper |
|
| Slide |
|
| Note |
|