The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory setting. The experiments replicate an OTC market similar to the one used in monetary and financial economics (Shi, 1995; Trejos and Wright, 1995; Duffie, Garleanu, and Pedersen, 2005):...

We develop a two-sector search-matching model of the labor market with imperfect mobility of workers, augmented to incorporate a housing market and a frictional goods market. Homeowners use home equity as collateral to finance idiosyncratic consumption opportunities. A financial innovation that...

Modern payment instruments can be complex. Yet, many of these can be interpreted as a form of money or credit, which are rather primitive instruments. We use a simple model of a monetary economy to provide an overview of some of the fundamental questions in the literature on payments. Why do...

In Money, Payments, and Liquidity, Ed Nosal and Guillaume Rocheteau provide a comprehensive investigation into the economics of money and payments by explicitly modeling trading frictions between agents. Adopting the search-theoretic approach pioneered by Nobuhiro Kiyotaki and Randall Wright,...

The paper analyses the problem of optimal liquidity provision in simple continuous-time general-equilibrium model under uncertainty. It argues that liquidity provision is subject to moral-hazard problems due to the unobservebility of households' characteristics and characterizes...

The paper develops a simple model of optimal corporate ownership structure in which costs and benefits of ownership concentration are analysed.

This is a survey of the literature on liquidity provision through banks. I first formulate the basic model underlying the modern literature on liquidity provision for households and then introduce the more recent literature on liquidity provision through banks and markets. Then I turn to...

The paper develops a theory of ownership structure based on the notion that corporate control and secondary market liquidity are not perfectly compatible with each other. We analyse the tradeoff between these two objectives for two different ownership structures: the privately held firm, which...