Liquidity and market incompleteness (original) (raw)

Abstract

This note shows that according to Lipmann and McCall's (1986) operational de…nition of liquidity, incomplete markets are a necessary condition for illiquidity.

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References (4)

  1. Barucci, Emilio (2003), Financial Markets Theory: Equilibrium, E¢ ciency and Information, Springer Verlag.
  2. Eichberger, Jürgen and Ian Harper (1997), Financial Economics, Oxford University Press.
  3. Lippman, Steven and John McCall (1986), "An Operational Measure of Liquidity," American Economic Review 76, 43-55.
  4. Zurita, Felipe (2001), "Liquidity as an Insurance Problem," Ponti…cia Universidad Católica de Chile -Economics Institute Working Paper #198.