Jump to ContentJump to Main Navigation
Money, Payments, and Liquidity$
Users without a subscription are not able to see the full content.

Ed Nosal and Guillaume Rocheteau

Print publication date: 2011

Print ISBN-13: 9780262016285

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262016285.001.0001

Show Summary Details
Page of

PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 25 June 2022

Liquidity, Monetary Policy, and Asset Prices

Liquidity, Monetary Policy, and Asset Prices

(p.285) 11 Liquidity, Monetary Policy, and Asset Prices
Money, Payments, and Liquidity

Ed Nosal

Guillaume Rocheteau

The MIT Press

This chapter investigates the process through which asset prices are determined in monetary economies. Here, fiat money is viewed as an asset when situated within a monetary economy. Though its fundamental value is zero, fiat money appears to have positive value if there is limited enforcement and a lack of record-keeping. The presents study focuses on an environment void of money, but with a fixed supply of assets. It shows that just like fiat money, real assets can be used as a medium of exchange in decentralized trades. Next, the chapter explores how inflation affects the pricing of assets within an environment that has a fixed supply of real assets. It also determines the possible value of assets by analyzing rate-of-return differences across assets as stemming from liquidity differences.

Keywords:   asset prices, monetary economy, fiat money, fixed supply of assets, medium of exchange, pricing of assets, real assets, rate-of-return differences, liquidity

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.