The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Liquidity Constraints

  • Stephen D. Williamson
Reference work entry


Liquidity constraints affect the ability of an economic agent to exchange his or her existing wealth for goods and services or for other assets. These constraints arise because of frictions, including private information, limited commitment, transactions costs, and spatial considerations.


Cash-in-advance model Consumption smoothing Contingent claims markets Endowments Expected utility Incomplete markets Law of large numbers Limited commitment Liquidity constraints Precautionary savings Private information Risk sharing Search and matching models of monetary exchange 

JEL Classifications

D4 D10 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Stephen D. Williamson
    • 1
  1. 1.