‘Illiquid lemon markets’ can worsen crises – NBER paper

Lemon in water

Capital markets with greater information asymmetries are less efficient and can make crises worse, new research finds.

Illiquid lemon markets and the macroeconomy applies the work of George Akerlof on a macro scale. Akerlof famously explored the market for used cars, with sellers struggling to signal whether they owned a high-quality “peach” or low-quality “lemon”.

Authors Aimé Bierdel, Andres Drenik, Juan Herreño and Pablo Ottonello apply this insight to capital markets in their paper

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account