Exploring the Dynamics of Global Liquidity


Sally Chen ; Philip Liu ; Andrea M. Maechler ; Chris Marsh ; Sergejs Saksonovs ; Hyun S Shin

Publication Date:

October 11, 2012

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This paper explores the concept of global liquidity, its measurement and macro-financial importance. We construct two sets of indicators for global liquidity: a quantity series distinguishing between core and noncore liabilities of financial intermediatires and a corresponding price series. Using price and quantity indicators simultaneously, it is possible to distinguish between shocks to the supply and demand for global liquidity, and isolate their impact on the economy. Our results confirm that global liquidity conditions matter for economic and financial stability, and points to indicators whose regular monitoring could be valuable to policymakers. 


Working Paper No. 2012/246



Publication Date:

October 11, 2012



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