Models where money arises due to a transactions motive imply that an increase in aggregate activity will raise the demand for money. Models where money arises due to money being the most preferred form of precautionary savings imply that a decrease in individual uncertainty will lower the demand...

In recent years, many emergency lending mechanisms have failed dramatically in their goal of providing financing of last resort to borrowers in need for liquidity: potential borrowers have been reluctant to seek financing, fearing that a request for funds could be seen as a sign of financial...