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| Tekijä: | Lyons, R. K. |
| Otsikko: | Theoretical perspective on euro liquidity |
| Lehti: | Economic Policy
2002 : OCT, 35, p. 571-597 |
| Asiasana: | THEORIES EURO LIQUIDITY ANALYTICAL REVIEW |
| Kieli: | eng |
| Tiivistelmä: | The author provides theoretical perspective on recent findings of increased transaction costs in the new dollar- euro market relative to the prior dollar-mark market, and assess the welfare significance of this drop in liquidity. In theory, transaction costs arise from information disadvantage costs, inventory management costs, and other market-making costs (e.g., order-processing costs). A review of theoretical reasons for the underlying costs to be rising can allow one to discriminate among hypotheses for the liquidity drop. New data on public trades support a customer liquidity hypothesis, based on the idea that the ultimate providers of liquidity in this market are customers rather than market-makers. |
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