The liquidity concept, which in Keynes's Treatise, (1930) had been confined in application to the behaviour of banks, can be reinterpreted so as to give it a wider reference. Any sort of financial firm can be confronted with similar alternatives, and so could have assets of various degrees of liquidity. One could think of it being faced with a ‘spectrum’ of such assets from which to choose, a spectrum which could be wider or narrower than that on which a bank would usually work. And having gone so far, why not go further? Why not look for liquidity elements in the decisions of all sorts of firms, and even in the management of his property by the private capitalist? This chapter considers the two directions in which the concept might be generalized — to the decisions of more sorts of choosers and between more sorts of assets.
Keywords: financial assets; Keynes; liquidity; financial firm; decisions
Chapter. 3607 words.
Subjects: Macroeconomics and Monetary Economics
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