Summary of Understanding Global Liquidity

BIS Working Papers No 402


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Understanding Global Liquidity summary
What exactly is “global liquidity”? And how does it function?


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Econometric analysis forms the main body of this crisp, efficient academic paper about “global liquidity.” Economists Sandra Eickmeier, Leonardo Gambacorta and Boris Hofmann contend that three main factors contribute to global liquidity: “global monetary policy, global credit supply” and “global credit demand.” They identify patterns in the interrelationships among them over time, particularly in the run-up to and the aftermath of the 2008 crisis. Though not radical, their conclusions show how data-managing econometric techniques can support economic conclusions. getAbstract recommends their clear insights as aids in exploring the largely uncharted subject of global liquidity.

In this summary, you will learn

  • What the concept of “global liquidity” is
  • Which three factors drive global liquidity
  • How these factors relate to each other at critical times


As globalization and deregulation have led to ever-growing cross-border financial activity, so do financial conditions and crises now transcend national frontiers. Many analyses of the 2008 financial crisis and its aftermath focus on “global liquidity,” an indeterminate notion, as a significant factor...
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About the Authors

Sandra Eickmeier is an economist at the Deutsche Bundesbank. Leonardo Gambacorta and Boris Hofmann are economists at the Bank for International Settlements.

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