Macroeconomics in times of liquidity crises: searching for economic essentials Calvo, Guillermo A.

Table of Contents:

Part I Toward the Liquidity Approach
1 Financial Crises and the Slow Mutation of Conventional Wisdom
2 The Liquidity Approach to Financial Crises
3 Monetary Theory: Overview and Liquidity Extensions
4 Nominal Anchoring with Liquid Monetary Policy Assets
5 Liquidity Crunch/Trap: Some Unconventional Output/Employment/ Growth Implications

Part II Emerging Market Crises through the Lens of the Liquidity Approach
6 Systemic Sudden Stops: Crises and Recoveries in Ems
7 Systemic Sudden Stops: The Relevance of Balance-Sheet Effects and Financial Integration

Since the subprime mortgage crisis that began in 2007, advanced economies have felt a nagging sense of insecurity. In parallel, the profession has witnessed phenomena that are alien to mainstream macroeconomic models. Financial crises are systemic, occurring simultaneously in different economies. In this book, Guillermo Calvo focuses on liquidity factors as a commonality in financial crises. Specifically, he examines the role of “liquidity crunch” in triggering crises. He also identifies a fundamental (but overlooked) idea in Keynes’s General Theory, termed by Calvo the price theory of money, to rationalize the resiliency of the U.S. dollar when other dollar-backed assets suffered a devastating liquidity crunch.

https://mitpress.mit.edu/books/macroeconomics-times-liquidity-crises