Calvo, Guillermo A.: Macroeconomics in times of liquidity crises
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Since 2007 there has been an enormous growth in studies looking at the interaction of financial markets and macroeconomics to which this book contributes. It focuses on the interaction between liquidity and the macroeconomy and is based on the author’s 2012 Ohlin lectures.
The book is concerned with the macroeconomic impact of liquidity traps and liquidity crunches rather than a deeper analysis of the role that liquidity plays in the economy in general. Accordingly the book is divided into two parts. The first part provides insight into a range of issues that affect and are affected by liquidity. For reasons of simplicity and readability it highlights a range of issues often without relying on fully articulated and properly microfounded models, although relevant references are generally provided. The second part is an empirical exploration of the effect of sudden stops of capital inflows, which are presumed to be triggered by a liquidity crunch.
Liquidity traps are defined as when the...