| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP1471
|
| DP1471 Incapacity Benefits versus Benefit Transfers |
| Dennis Snower; Mike Orszag
|
| 发表日期 | 1996-09-30
|
| 出版年 | 1996
|
| 语种 | 英语
|
| 摘要 | I present a simple model in which it is possible that opening a new market makes everybody worse off. Unlike previous examples in the literature, the analysis does not rely on relative price changes of different consumption goods. This is shown in a standard framework in which uninformed traders with hedging needs interact with risk-averse informed traders in security markets where prices are set by a competitive market-making system. The paper emphasizes cross-market links between hedging and speculative demands: risk-averse arbitrageurs can hedge in the new market to lower the risk of speculative positions in the pre-existing market. This causes a greater incidence of speculative activity in the old market, leading some traders with pure hedging motives in that market to withdraw, so reducing liquidity in the old market. The general point argued here is that a risk-averse informed trader who believes an asset to be mispriced will typically be able to reduce the risk of speculating on his belief by hedging with other assets. The availability of such hedging instruments will in turn determine which types of speculative activity are of low risk, and this will influence the strategies to which traders will devote resources. |
| 主题 | Financial Economics
|
| 关键词 | Arbitrage
Financial innovation
Hedging
|
| URL | https://cepr.org/publications/dp1471
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
|
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/530610
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推荐引用方式
GB/T 7714 |
Dennis Snower,Mike Orszag. DP1471 Incapacity Benefits versus Benefit Transfers. 1996.
|
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