Market Frictions

Author : Ramon P. DeGennaro
Publisher : Unknown
Page : 16 pages
File Size : 43,5 Mb
Release : 2008-01
Category : Electronic
ISBN : 1422319873

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Financial Market Frictions by Ramon P. DeGennaro Pdf

Defined as anything that interferes with trade, financial market frictions (FMF) can exist even in efficient markets. FMF generate real costs to investors, generate business opportunities, & change over time. FMF depend in part on market structure. Market structure tends to evolve over time, as trading volume increases, from low fixed costs & high marginal costs to high fixed costs & low marginal costs. The authors classify & discuss 5 categories of FMF: transactions costs, taxes & regulations, asset indivisibility, non-traded assets, & agency & info. problems. FMF impose utility costs on investors by making preferable investment portfolios unattainable. Investors who ignore market FMF compound the harm done by the FMF themselves. Illustrations.

Author : Nicolas Petrosky-Nadeau,Etienne Wasmer
Publisher : MIT Press
Page : 271 pages
File Size : 49,8 Mb
Release : 2017-11-10
Category : Business & Economics
ISBN : 9780262036450

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Labor, Credit, and Goods Markets by Nicolas Petrosky-Nadeau,Etienne Wasmer Pdf

An integrated framework to study the theoretical and quantitative properties of economies with frictions in labor, financial, and goods markets. This book offers an integrated framework to study the theoretical and quantitative properties of economies with frictions in multiple markets. Building on analyses of markets with frictions by 2010 Nobel laureates Peter A. Diamond, Dale T. Mortensen, and Christopher A. Pissarides, which provided a new theoretical approach to search markets, the book applies this new paradigm to labor, finance, and goods markets. It shows, in particular, how frictions in different markets interact with each other. The book first covers the main developments in the analysis of the labor market in the presence of frictions, offering a systematic analysis of the dynamics of this environment and explaining the notion of macroeconomic volatility. Then, building on the generality and simplicity of the search analysis, the book adapts it to other markets, developing the tools and concepts to analyze friction in these markets. The book goes beyond the traditional general equilibrium analysis of markets, which is often frictionless. It begins with the standard analysis of a single market, and then sequentially integrates more markets into the analysis, progressing from labor to financial to goods markets. Along the way, the book provides a number of useful results and insights, including the existence of a direct link between search frictions and the degree of volatility in the economy.

Author : Gabriele Camera
Publisher : Springer Science & Business Media
Page : 268 pages
File Size : 53,9 Mb
Release : 2006-01-09
Category : Business & Economics
ISBN : 9783540295006

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Recent Developments on Money and Finance by Gabriele Camera Pdf

Assembles theoretical contributions to monetary theory, banking and finance. This book includes papers spanning themes from monetary policy to the optimal design of financial systems, and from the study of the causes of financial crises to payment systems design. It serves as a reference to researchers interested in the study of financial systems.

Author : Kirsten W. Endres
Publisher : Berghahn Books
Page : 170 pages
File Size : 43,7 Mb
Release : 2019-06-06
Category : Business & Economics
ISBN : 9781789202458

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Market Frictions by Kirsten W. Endres Pdf

Based on ethnographic research conducted over several years, Market Frictions examines the tensions and frictions that emerge from the interaction of global market forces, urban planning policies, and small-scale trading activities in the Vietnamese border city of Lào Cai. Here, it is revealed how small-scale traders and market vendors experience the marketplace, reflect upon their trading activities, and negotiate current state policies and regulations. It shows how “traditional” Vietnamese marketplaces have continually been reshaped and adapted to meet the changing political-economic circumstances and civilizational ideals of the time.

Author : Claire H. Hollweg,Daniel Lederman,Diego Rojas
Publisher : World Bank Publications
Page : 123 pages
File Size : 51,9 Mb
Release : 2014-07-03
Category : Business & Economics
ISBN : 9781464802638

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Sticky Feet by Claire H. Hollweg,Daniel Lederman,Diego Rojas Pdf

This report quantifies labor mobility costs in developing countries and simulates the implied adjustment paths of employment and wages following a change in trade policy. High mobility costs are shown to reduce the potential gains to trade reform.

Author : Mr.Pragyan Deb
Publisher : International Monetary Fund
Page : 41 pages
File Size : 55,8 Mb
Release : 2016-08-26
Category : Business & Economics
ISBN : 9781475530315

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Market Frictions, Interbank Linkages and Excessive Interconnections by Mr.Pragyan Deb Pdf

This paper studies banks' decision to form financial interconnections using a model of financial contagion that explicitly takes into account the crisis state of the world. This allows us to model the network formation decision as optimising behaviour of competitive banks, where they balance the benefits of forming interbank linkages against the cost of contagion. We use this framework to study various market frictions that can result in excessive interconnectedness that was seen during the crisis. In this paper, we focus on two channels that arise from regulatory intervention—deposit insurance and the too big to fail problem.

Author : João Correia Leitão,Zélia Serrasqueiro,Manuel da Rocha Armada
Publisher : Springer
Page : 390 pages
File Size : 45,6 Mb
Release : 2018-09-10
Category : Business & Economics
ISBN : 3319689223

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Market Frictions, Risk Management and Performance by João Correia Leitão,Zélia Serrasqueiro,Manuel da Rocha Armada Pdf

This book describes risk management and performance under the challenging context of market frictions, an environment that is characterized by a high degree of volatility and uncertainty. The contributions provide answers to essential questions on how shock transmission can be regulated or arbitrated for exploitation as investment opportunities in high-uncertainty contexts, and on how the combination of competition and high uncertainty harms or benefits the financial markets and corporate performance.

Author : Ms.Emine Boz,Ceyhun Bora Durdu,Ms.Nan Li
Publisher : International Monetary Fund
Page : 51 pages
File Size : 49,9 Mb
Release : 2012-10-09
Category : Business & Economics
ISBN : 9781475512496

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Emerging Market Business Cycles by Ms.Emine Boz,Ceyhun Bora Durdu,Ms.Nan Li Pdf

Emerging economies are characterized by higher consumption and real wage variability relative to output and a strongly countercyclical current account. A real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions and countercyclical interest rate shocks can jointly account for these regularities. In the face of countercyclical interest rate shocks, search-matching frictions increase future employment uncertainty, improving workers’ incentive to save and generating a greater response of consumption and the current account. Higher consumption response in turn feeds into larger fluctuations in the workers’ bargaining power while the interest rates shocks lead to variations in the firms’ willingness to hire; both of which contribute to a highly variable real wage.

Author : Ted Lewis
Publisher : HarperBusiness
Page : 272 pages
File Size : 47,5 Mb
Release : 1997-09-12
Category : Business & Economics
ISBN : 0887308473

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The Friction-Free Economy by Ted Lewis Pdf

Imagine a world where supply no longer equals demand. A world where a company craving greater market share gives away its most valuable product -- and generates millions of dollars. A world where the company that boasts the greatest chunk of consumer demand experiences even more demand; where the antagonistic relationship between buyer and seller has been replaced with a cooperative, knowledge-based exchange; where companies in every industry think like futurists, personalize products and services regardless of cost, target individuals rather than blanket the masses, and renovate old products instead of just creating new ones.

Author : Roger G. Ibbotson,Thomas M. Idzorek,Paul D. Kaplan,James X. Xiong
Publisher : CFA Institute Research Foundation
Page : 128 pages
File Size : 45,8 Mb
Release : 2018
Category : Business & Economics
ISBN : 9781944960612

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Popularity: A Bridge between Classical and Behavioral Finance by Roger G. Ibbotson,Thomas M. Idzorek,Paul D. Kaplan,James X. Xiong Pdf

Classical and behavioral finance are often seen as being at odds, but the idea of “popularity” has been introduced as a way of reconciling the two approaches. Investors like or dislike various characteristics of securities for rational reasons (as in classical finance) or irrational reasons (as in behavioral finance), which makes the assets popular or unpopular. In the capital markets, popular (unpopular) securities trade at prices that are higher (lower) than they would be otherwise; hence, the shares may provide lower (higher) expected returns.This book builds on this idea and expands it in two major ways. First, it introduces a rigorous asset pricing model, the popularity asset pricing model (PAPM), which adds investor preferences for security characteristics other than the risk and expected return that are part of the capital asset pricing model. A major conclusion of the PAPM is that the expected return of any security is a linear function of not only its systematic risk (beta) but also of all security characteristics that investors care about. The other major contribution of the book is new empirical work that, while confirming the well-known premiums (such as size, value, and liquidity) in a popularity context, supports the popularity hypothesis on the basis of portfolios of stocks based on such characteristics as brand value, sustainable competitive advantage, and reputation. Popularity unifies the factors that affect price in classical finance with those that drive price in behavioral finance, thus creating a unifying theory or bridge between classical and behavioral finance.

Author : Liang Wang,Randall Wright,Lucy Qian Liu
Publisher : International Monetary Fund
Page : 54 pages
File Size : 43,7 Mb
Release : 2017-01-27
Category : Business & Economics
ISBN : 9781475572339

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Money and Credit by Liang Wang,Randall Wright,Lucy Qian Liu Pdf

We develop a theory of money and credit as competing payment instruments, then put it to work in applications. Buyers can use cash or credit, with the former (latter) subject to the inflation tax (transaction costs). Frictions that make the choice of payment method interesting also imply equilibrium price dispersion. We deliver closed-form solutions for money demand. We then show the model can simultaneously account for the price-change facts, cash-credit shares in micro payment data, and money-interest correlations in macro data. We analyze the effects of inflation on welfare, price dispersion and markups. We also describe nonstationary equilibria as self-fulfilling prophecies, which is standard, except here it entails dynamics in the price distribution.

Author : Mr.Pragyan Deb
Publisher : International Monetary Fund
Page : 41 pages
File Size : 50,5 Mb
Release : 2016-08-26
Category : Business & Economics
ISBN : 9781475530292

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Market Frictions, Interbank Linkages and Excessive Interconnections by Mr.Pragyan Deb Pdf

This paper studies banks' decision to form financial interconnections using a model of financial contagion that explicitly takes into account the crisis state of the world. This allows us to model the network formation decision as optimising behaviour of competitive banks, where they balance the benefits of forming interbank linkages against the cost of contagion. We use this framework to study various market frictions that can result in excessive interconnectedness that was seen during the crisis. In this paper, we focus on two channels that arise from regulatory intervention—deposit insurance and the too big to fail problem.

Author : Robert E. Hall
Publisher : Unknown
Page : 60 pages
File Size : 42,8 Mb
Release : 1998
Category : Labor market
ISBN : OSU:32435057674400

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Labor-market Frictions and Employment Fluctuations by Robert E. Hall Pdf

The labor market occupies center stage in modern theories of fluctuations. The most important phenomenon to explain and understand in a recession is the sharp decline in employment and jump in unemployment. This chapter for the Handbook of Macroeconomics considers explanations based on frictions in the labor market. Earlier research within the real business cycle paradigm considered frictionless labor markets where fluctuations in the volume of work effort represented substitution by households between work in the market and activities at home. A preliminary section of the chapter discusses why frictionless models are incomplete they fail to account for either the magnitude or persistence of fluctuations in employment. And the frictionless models fail completely to describe unemployment. The evidence suggests strongly that consideration of unemployment as a third use of time is critical for a realistic model. The two elements of a theory of unemployment are a mechanism for workers to lose or leave their jobs and an explanation for the time required for them to find new jobs. Theories of mechanism design or of continuous re-bargaining of employment terms provide the first. The theory of job search together with efficiency wages and related issues provides the second. Modern macro models incorporating these features come much closer than their predecessors to realistic and rigorous explanations of the magnitude and persistence of fluctuations.

Author : Luis Franjo,Nathalie Pouokam,Francesco Turino
Publisher : INTERNATIONAL MONETARY FUND
Page : 33 pages
File Size : 44,6 Mb
Release : 2020-09-25
Category : Business & Economics
ISBN : 1513557807

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Financial Frictions and Firm Informality: A General Equilibrium Perspective by Luis Franjo,Nathalie Pouokam,Francesco Turino Pdf

In this paper we build a model of occupational choice with informal production and progressive income taxation. We calibrate the model to the Brazilian economy to evaluate the impact of removing financial frictions on informality. We find that financial deepening leads to a drop in the size of the informal sector (from 37 percent to 22 percent of official GDP), to an increase in measured TFP (by 4 percent), to an increase in official GDP (by 27 percent), to a decrease in tax evasion (by 17 percent) and to an increase in fiscal revenues (by 15 percent). When assessing the response of this policy at different levels of financial development, we find a non-linear relationship between the credit-to-GDP ratio on the one hand, and either the size of the informal economy, or GDP per capita on the other hand. We test these features with cross-country data and find evidence in favor of both types of non-linearity. We also investigate changes in the income tax progressitivity as an alternative policy and find it to be more effective in countries with a medium to high level of financial markets development.

Author : Gadi Barlevy
Publisher : Unknown
Page : 54 pages
File Size : 54,5 Mb
Release : 1999
Category : Resource allocation
ISBN : UCLA:L0079814265

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Credit Market Frictions and the Reallocation Process by Gadi Barlevy Pdf