Asset illiquidity and market shutdowns in competitive equilibrium

► I present an endogenous growth model with asymmetric information about asset qualities. ► Asymmetric information lowers economic growth if and only if there are gains from asset trade. ► In this case, the trading volume in the asset market is always positive. ► Gains from asset trade exist if and only if aggregate productivity is sufficiently high. ► Asset market shutdowns and accompanying low economic growth are due to low aggregate productivity.