“A basic definition of liquidity in economics refers to how easy it is to convert an asset to cash. Liquidity is fickle in times of crisis and yet its role is often overlooked in standard crises explanations. Guillermo Calvo’s elegant analysis of the elusive concept of liquidity coupled with his insightful studies of some of the major crises of the past few decades make this book essential reading for economists, investors, and policy makers who are interested in gaining a deeper understanding of financial crises and their impacts.”

—Carmen M. Reinhart, Minos A. Zombanakis Professor of the International Financial System, Harvard University; coauthor of This Time Is Different: Eight Centuries of Financial Folly

“Liquidity accounts for both the strengths and the weaknesses of modern monetary economies, claims Guillermo Calvo. His price theory of money gives new meaning to the old adage that an emerging currency is one from which one tries to emerge in an emergency. Essential reading for anyone trying to understand recent financial crises in both rich and poor nations.”

—Andrés Velasco, Professor of Professional Practice in International Development, Columbia University

“Throughout his distinguished career, Guillermo Calvo has always sought to uncover the deeper economic truths that surround us. With this book, he does it again! Calvo forces us to re-calibrate our intellectual frameworks to grasp some of the most important questions: What lies behind financial crises? Which macro stabilization policies should we pursue? What accounts for the structure of the international monetary system? He argues convincingly that liquidity plays a major role in all these phenomena. Intellectually stimulating, his new book opens new vistas for future research.”

—Pierre-Olivier Gourinchas, Professor of Economics, University of California, Berkeley; editor-in-chief of IMF Economic Review