The recovery from the 2008-2009 recession has been much slower than the average recovery since the 1924 recession. As analysts who believe that the St. Louis model created by Leonall Andersen and Jerry Jordan still has relevance we believe that the slow rate of M2 growth since 2Q2009 is a major reason why GDP growth has been so slow. At the 9th Annual Missouri Economics Conference on March 27, ...

We add inside and outside money to the standard GEI model. If there enough gains to trade via money, then monetary equilibrium (ME) exists and money has positive value, even when GEI fails to exist. The nonexistence of GEI shows up as a liquidity trap in terms of the ME. In sharp contrast to GEI, the ME are generically determinate not only in terms of real, but also financial, variables. © 2003...

The recent recession in the US saw an unusually large and persistent decline in output, low inflation and deflation, significant house price declines, and short term interest rates near zero. Much discussion of this episode has centered around financial markets and the high leverage positions at the onset of the recession. In this paper, we analyze the role of leverage in determining the proper...

A model of public and private liquidity is constructed that integrates financial intermediation theory with a New Monetarist monetary framework. Key features of the model are non-passive fiscal policy and costs of operating a currency system, which imply that an optimal policy deviates from the Friedman rule. A liquidity trap can exist in equilibrium away from the Friedman rule, and there exist...