Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/122181
Authors: 
Blume, Lawrence E.
Cogley, Timothy
Easley, David A.
Sargent, Thomas J.
Tsyrennikov, Viktor
Year of Publication: 
2015
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 313
Abstract: 
We propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity. We analyze economies with complete and incomplete financial markets and/or restricted trading possibilities in the form of borrowing limits or transaction costs. We describe circumstances under which various restrictions on financial markets are desirable according to our welfare criterion.
Subjects: 
social welfare
heterogeneous beliefs
spurious unanimity
speculation
pessimism
incomplete markets
financial regulation
Document Type: 
Working Paper

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