
Inside and Outside Liquidity
MIT Press
Published on 7. January 2011
Book
Hardback
264 pages
978-0-262-01578-3 (ISBN)
Description
Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. In Inside and Outside Liquidity, leading economists Bengt Holmström and Jean Tirole offer an original, unified perspective on these questions drawing on insights from modern corporate finance. In a slight, but important departure from the standard theory of finance, they show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. In this perspective, private risk sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions. In an epilogue, Holmström and Tirole show how their theory can be used to understand some aspects of the recent financial crisis.
More details
Series
Language
English
Place of publication
Cambridge, Mass.
United States
Publishing group
MIT Press Ltd
Target group
Professional and scholarly
US School Grade: College Graduate Student and over
Illustrations
22 Schaubilder
22 figures
Dimensions
Height: 229 mm
Width: 152 mm
Thickness: 13 mm
Weight
499 gr
ISBN-13
978-0-262-01578-3 (9780262015783)
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Schweitzer Classification
Other editions
Additional editions

Bengt Holmstroem | Jean Tirole
Inside and Outside Liquidity
Book
01/2013
MIT Press
€32.00
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Persons
Bengt Holmström is Paul A. Samuelson Professor of Economics at MIT, where he was Head of the Economics Department from 2003 to 2006. Jean Tirole is Scientific Director of IDEI (Institut d'Economie Industrielle), Chairman of the Board of TSE (Toulouse School of Economics), and Annual Visiting Professor of Economics at MIT.
Author
Paul A. Samuelson Professor of EconomicsMassachusetts Institute of Technology
Institut d'Economie Industrielle