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Dafermos, Yannis (2012) 'Liquidity preference, uncertainty, and recession in a stock-flow consistent model.' Journal of Post-Keynesian Economics, 34 (4). pp. 749-776.

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Abstract

This paper develops a stock-flow consistent model that explicitly integrates the role of liquidity preference and perceived uncertainty into the decision-making process of households, firms, and commercial banks. Emphasis is placed on (1) the link between the precautionary motive and the asset choice of the private sector, (2) the effect of perceived uncertainty on the desired margins of safety and borrowing, and (3) the impact of financial obligations on the liquidity preference of households and firms. Performing a simulation experiment, the paper illuminates the channels through which a rise in perceived uncertainty is likely to set off a recessionary process.

Item Type: Journal Article
Keywords: liquidity preference, perceived uncertainty, recessionary process, stock-flow consistent modeling
SOAS Departments & Centres: Departments and Subunits > Department of Economics
ISSN: 01603477
DOI (Digital Object Identifier): https://doi.org/10.2753/PKE0160-3477340407
Date Deposited: 02 Sep 2019 09:18
URI: https://eprints.soas.ac.uk/id/eprint/31528
Related URLs: http://dx.doi.o ... 0160-3477340407 (Publisher URL)

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