conventional limits to arbitrage, we show that liquidity-linked variables are associated with a faster reversion of arbitrage …

towards Pareto optimal rest-points. Below this growth rate, the economy enters a (sub-optimal) liquidity trap where monetary … policy is ineffective ; above this threshold inflation rises. Finally, market liquidity, measured through the speed of real …

Theory of Money holds provided the economy is not trapped in a liquidity hole. The traditional theory of comparative …