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Liquid Assets (liquid + asset)
Selected AbstractsConsumption Over the Life CycleECONOMETRICA, Issue 1 2002Pierre-Olivier Gourinchas This paper estimates a structural model of optimal life-cycle consumption expenditures in the presence of realistic labor income uncertainty. We employ synthetic cohort techniques and Consumer Expenditure Survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups. The model fits the profiles quite well. In addition to providing reasonable estimates of the discount rate and risk aversion, we find that consumer behavior changes strikingly over the life cycle. Young consumers behave as buffer-stock agents. Around age 40, the typical household starts accumulating liquid assets for retirement and its behavior mimics more closely that of a certainty equivalent consumer. Our methodology provides a natural decomposition of saving and wealth into its precautionary and life-cycle components. [source] 2002 LAWRENCE R. KLEIN LECTURE LIQUIDITY AND ASSET PRICES*INTERNATIONAL ECONOMIC REVIEW, Issue 2 2005Nobuhiro Kiyotaki We broadly define liquid assets, or monetary assets, as any asset that can be readily sold in the market and can be held by a number of people in succession before maturity. We ask in what environment is the circulation of liquid assets essential for the smooth running of the economy. By developing a canonical model of a monetary economy (i.e., where the circulation of liquid assets is essential), we are able to examine the interaction between liquidity, asset prices, and aggregate economic activity. [source] Ownership Structure Changes in the Insurance Industry: An Analysis of DemutualizationJOURNAL OF RISK AND INSURANCE, Issue 3 2003Krupa S. Viswanathan This article focuses on the demutualization process and investigates why certain mutuals undergo this organizational structure change. The primary motivation for conversion is access to capital. By statute, mutual firms are limited in their capital-raising activities while stock firms can attract funds through a variety of stock and debt offerings. By examining the financial characteristics of firms that demutualize, changes in business practices in the years surrounding conversion can be observed. Determinants of the conversion decision are explored through logistic regression. In the years before demutualization, converting property-liability mutuals exhibit significantly lower surplus-to-asset ratios. This capital constraint eases after demutualization. Converting life-health mutuals hold a significantly lower proportion of liquid assets; in addition, they have a higher proportion of separate accounts under management. This liquidity constraint and increased focus on a higher managerial discretion activity drive the demutualization decision. For both property-liability and life-health converting mutuals, support for the access to capital hypothesis is found. [source] Simultaneous determination of inventories and accounts receivableMANAGERIAL AND DECISION ECONOMICS, Issue 4 2005Ayub Mehar The study presents a model based on 3375 observations from industrial firms in Pakistan, and the three-stage least square (3SLS) technique has been applied for the estimation. The results indicate that the economic order quantity (EOQ) of inventories is not a constant magnitude; it is a variable closely associated with ,time trend'. While the ,buffer stock' element can be estimated through the constant term of an equation. Receivables from customers show a negative correlation with liquid assets and the cost of production. Receivables are also shown to act as substitute for closing inventories. Copyright © 2005 John Wiley & Sons, Ltd. [source] Institutional Investors' Preferences for REIT StocksREAL ESTATE ECONOMICS, Issue 4 2002Brian A. Ciochetti This article investigates the determinants of real estate investment trusts (REIT) portfolio investment and institutional REIT ownership using multivariate Tobit regressions. We contend that many institutional investors take larger positions in more liquid assets like REIT stocks, as compared with private real estate equities, because of liquidity considerations. Consistent with this contention, we find that liquidity constraints are significantly related to REIT portfolio investment by institutional investors. We also find that institutional investors have different preferences for REIT stocks than do other investors; they generally prefer larger, more liquid REIT stocks. [source] Playing the Stockmarket in Tana TorajaTHE AUSTRALIAN JOURNAL OF ANTHROPOLOGY, Issue 1 2000Robyn Thompson This paper describes the players and the play in a weekly stockmarket in Tana Toraja. South Sulawesi, where up to 600 buffalo bulls are bought and sold for exorbitant prices by any standards. These prices are partly determined by external, global economic forces. The buffaloes are all intended for sacrifice in elaborate funerals. Although contributed by individuals or families they are conceived as part of mana. the common wealth of tongkonan. the origin houses of the Toraja. Live bulls cannot be given away but are able to be lent in ceremonial exchanges at funerals. After sacrifice, their raw meat is distributed to participants in the funeral in a version of potlatch. Bulls mediate all exchange. apart from mundane commodity exchange, and are liquid assets. A mature black bull is an object of general equivalence able to be exchanged as payment for certain symbolic objects. In the past the production, distribution and circulation of buffaloes, both on the hoof and as meat, were controlled by the nobility. Buffaloes were said to be in finite supply. They derived from the Upperworld and accompanied the ancestors of the Toraja nobility to this world and were replenished through the ritual of the ways of the ancestors. Now the advent of the market has democratised buffaloes. There has been a dispersion of wealth and the power that the bulls embody. Any man,noble, commoner or former slave-who has sufficient cash is able to buy and sell buffaloes: to have a share in the stockmarket. The marketplace has become a new field of power play, one where innovative methods are being found for increasing the supply of buffaloes by importing hundreds of inferior quality buffaloes and by a program of artificial insemination which has been instigated by the local government. In the parlance of Wall Street this is a bull market. [source] Banks' Advantage in Hedging Liquidity Risk: Theory and Evidence from the Commercial Paper MarketTHE JOURNAL OF FINANCE, Issue 2 2006EVAN GATEV ABSTRACT Banks have a unique ability to hedge against market-wide liquidity shocks. Deposit inflows provide funding for loan demand shocks that follow declines in market liquidity. Consequently, banks can insure firms against systematic declines in liquidity at lower cost than other institutions. We provide evidence that when liquidity dries up and commercial paper spreads widen, banks experience funding inflows. These flows allow banks to meet loan demand from borrowers drawing funds from commercial paper backup lines without running down their holdings of liquid assets. We also provide evidence that implicit government support for banks during crises explains these funding flows. [source] Banks as Liquidity Providers: An Explanation for the Coexistence of Lending and Deposit-TakingTHE JOURNAL OF FINANCE, Issue 1 2002Anil K. Kashyap What ties together the traditional commercial banking activities of deposit-taking and lending? We argue that since banks often lend via commitments, their lending and deposit-taking may be two manifestations of one primitive function: the provision of liquidity on demand. There will be synergies between the two activities to the extent that both require banks to hold large balances of liquid assets: If deposit withdrawals and commitment takedowns are imperfectly correlated, the two activities can share the costs of the liquid-asset stockpile. We develop this idea with a simple model, and use a variety of data to test the model empirically. [source] Semi-non-parametric estimates of substitution for Canadian monetary assetsCANADIAN JOURNAL OF ECONOMICS, Issue 1 2002Adrian R. Fleissig We estimate the dynamic Fourier expenditure system to obtain consistent estimates of short-run and long-run Morishima elasticities of substitution for Canadian liquid assets. We argue that the variability of the estimated elasticities and evidence of less than perfect substitution between monetary assets interferes with the successful use of simple-sum aggregates and traditional log-linear money-demand functions. Calibrations semi-non-paramétriques de la substitution pour des actifs monétaires canadiens. Les auteurs calibrent le système dynamique de dépenses à la Fourier pour obtenir des estimations cohérentes des élasticités de substitution à la Morishima à court et à long termes pour des actifs monétaires canadiens. Ils suggèrent que la variabilité des élasticités estimées et la constatation que la substitution n'est pas parfaite entre les actifs monétaires rendent difficile un usage heureux des agrégats de simple somme et des fonctions log-linéaires de demande de monnaie. [source] | ||||||||||