UNCERTAINTY, LIQUIDITY PREFERENCE – EFFECTIVE DEMAND: EMPIRICAL EVIDENCES ABOUT THE FINANCIAL CRISES OF SEPTEMBER 2008

Abstract

This paper describes on three basic concepts of Keynes's contribution to economic science: Uncertainty, Liquidity Preference and Effective Demand. In a world where there is uncertainty, the agents may prefer to increase the liquidity of their assets. In that case, there will be a lack of effective demand. The notion of uncertainty is intrinsic to a system that can not be reduced to a set of probabilities. In a context of unpredictability is possible that agents in a situation of instability, prefer to increase the liquidity of its assets. Being a modern monetary economy, a choice that increases the liquidity and the decision to hoard money - liquid asset par excellence - implies a reduction in demand. The purpose of this paper is to present empirical results for the liquidity ratios of the companies listed on stock exchanges in Brazil and the United States. Was confirmed in the American case, the preference for liquidity in situations of uncertainty, as occurred in the 2008 financial crisis. However, empirical analysis showed no significant increase in liquidity preference in the Brazilian economy after the outbreak of the crisis. The result, as the theory predicted, was the reduction in growth rates of GDP. It is possible to infer that there is some usefulness in the elements under study and is recognized the need to consider the existence and importance of these concepts in the understanding of macroeconomic dynamics.