{
  "title": "Monetary Transaction Costs and the Term Premium",
  "publication": "IMF Working Papers, April 3, 2013",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/index.md",
  "summary": "We show that, in a monetary equilibrium, trade and asset prices depend on both the supply of the liquidity by the Central Bank and the liquidity of assets and commodities. As a result, monetary aggregates are informative for the conduct of monetary policy.",
  "authors": [
    "Raphael A Espinoza",
    "Dimitrios P. Tsomocos"
  ],
  "publishDate": "2013-04-03",
  "series": "IMF Working Papers",
  "sections": [
    {
      "heading": "Main findings",
      "content": "- Trade and asset prices depend on both the supply of liquidity by the Central Bank and the liquidity of assets and commodities.\n- Monetary aggregates are informative for the conduct of monetary policy.\n- Asset prices are higher in liquidity-constrained states of nature.\n- A term premium is generated even in the absence of aggregate uncertainty.\n- These results hold in any monetary economy with heterogeneous agents and short-term liquidity effects, where monetary costs act as transaction costs and the quantity theory of money is verified."
    },
    {
      "heading": "Policy implications and analysis",
      "content": "- Monitoring monetary aggregates provides actionable information for the conduct of monetary policy because asset and trade prices respond to central bank liquidity supply.\n- Policies that affect the liquidity of assets and commodities can influence asset prices and the term premium independently of aggregate uncertainty.\n- Recognizing monetary costs as transaction costs highlights short-term liquidity effects as a channel through which monetary policy impacts asset valuation."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Title: Monetary Transaction Costs and the Term Premium\n- Authors: Raphael A Espinoza, Dimitrios P. Tsomocos\n- Date: April 3, 2013\n- Series: Working Paper No. 2013/085\n- Issue: 085\n- Volume: 2013\n- Pages: 38\n- DOI: https://doi.org/10.5089/9781484392331.001\n- Stock No: WPIEA2013085\n- ISBN: 9781484392331\n- ISSN: 1018-5941\n- Subjects: Asset prices, Commodities, Liquidity, Monetary base, Short term interest rates\n- Keywords: risk premium, spot interest rate, WP\n\nThis Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.\n\n---\n\n Content in this bundle\n\n- Wp1385\n  - Wp1385 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp1385 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/bundle-manifest.json)",
    "Authors: Raphael A Espinoza, Dimitrios P. Tsomocos",
    "Published: April 3, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484392331.001",
    "Trade and asset prices depend on both the supply of liquidity by the Central Bank and the liquidity of assets and commodities.",
    "Monetary aggregates are informative for the conduct of monetary policy.",
    "Asset prices are higher in liquidity-constrained states of nature.",
    "A term premium is generated even in the absence of aggregate uncertainty.",
    "These results hold in any monetary economy with heterogeneous agents and short-term liquidity effects, where monetary costs act as transaction costs and the quantity theory of money is verified.",
    "Monitoring monetary aggregates provides actionable information for the conduct of monetary policy because asset and trade prices respond to central bank liquidity supply.",
    "Policies that affect the liquidity of assets and commodities can influence asset prices and the term premium independently of aggregate uncertainty.",
    "Recognizing monetary costs as transaction costs highlights short-term liquidity effects as a channel through which monetary policy impacts asset valuation.",
    "Title: Monetary Transaction Costs and the Term Premium",
    "Authors: Raphael A Espinoza, Dimitrios P. Tsomocos",
    "Date: April 3, 2013",
    "Series: Working Paper No. 2013/085",
    "Issue: 085",
    "Volume: 2013",
    "Pages: 38",
    "DOI: https://doi.org/10.5089/9781484392331.001",
    "Stock No: WPIEA2013085",
    "ISBN: 9781484392331",
    "ISSN: 1018-5941",
    "Subjects: Asset prices, Commodities, Liquidity, Monetary base, Short term interest rates",
    "Keywords: risk premium, spot interest rate, WP",
    "**Wp1385**"
  ],
  "related": [
    {
      "title": "Wp1385",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1385.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1385.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1385.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/monetary-transaction-costs-and-the-term-premium-40458/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-23T20:41:18.922Z"
}