Essential resources like electricity and water can experience rapidly changing demand or supply while the other side of the market is unchanged. Short-run price variation could efficiently allocate resources at these critical times, but only if consumers exhibit short-run demand elasticity. The...

In the recent SVAR literature, the liquidity effect has been studied by imposing a variety of identifying restrictions required under the assumption that the SVAR fundamental disturbances are homoscedastic. Using typical SVAR processes, we first show that this assumption is not supported by the...