2011•Economics Research InternationalOpen access

Comparative Statics of Central Bank Liquidity Management: Some Insights

Indranil Bhattacharyya, Satyananda Sahoo

Abstract

The paper demonstrates the efficacy of liquidity management through both the rate and quantum channels. Using the concepts of autonomous and discretionary liquidity, the paper derives the optimal policy mix of instruments which can be used for stabilizing the price of liquidity. For effective liquidity management, the sufficient condition highlighted in the paper has important implications for developing market‐related monetary policy instruments, particularly in emerging market economies.

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Available abstract

Key concepts: Market liquidity, Comparative statics, Liquidity risk, Liquidity crisis, Monetary economics, Monetary policy, Economics, Central bank