Ghosal, Sayantan (2009) Financial markets : efficiency, stability. In: New Micro-foundations for Macroeconomics, University of Warwick, 10-11 Jul 2009 (Unpublished)

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Abstract

The paper will construct a model where there is a trade-off between efficiency and stability when individuals trade in financial markets. Achieving efficiency requires the use of trading strategies that are sensitive to precise forecasts about future prices. However, the use of such strategies, combined with deviations from perfect foresight, ensures that convergence to a perfect foresight equilibrium is harder to achieve.

Item Type:	Conference Item (Paper)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Divisions:	Faculty of Social Sciences > Economics
Date:	11 July 2009
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Conference Paper Type:	Paper
Title of Event:	New Micro-foundations for Macroeconomics
Type of Event:	Conference
Location of Event:	University of Warwick
Date(s) of Event:	10-11 Jul 2009
URI:	http://wrap.warwick.ac.uk/id/eprint/45427

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