Definition of liquidity preference in English:

liquidity preference


mass nounEconomics
  • (in Keynesian theory) the preference of investors for holding liquid assets rather than securities or long-term interest-bearing investments.

    as modifier ‘liquidity-preference theory’
    • ‘Increasingly, the monetary stimulus of the Federal Reserve is being more than offset by a shift in liquidity preference toward consumers rebuilding their hitherto non-existent household savings.’
    • ‘He began his career as a Keynesian economist at Cambridge, leaning to liquidity preference theory against Robertson's loanable funds theory in the Cambridge monetary controversies.’
    • ‘What we now call real balances or liquidity preference was long appreciated and treated as hoarding.’
    • ‘In effect, ‘the classical version is superior because it avoids the confusion between money and credit which Friedman correctly notes as plaguing the Keynesian monetary or liquidity preference theory of interest’.’
    • ‘To the extent that liquidity preference is satisfied in periods of calm by assets that prove to be illiquid in periods of stress, the system is rendered more unstable.’