Endogenous differential information in financial markets

Sebastian cea-Echenique and Juan Pablo Torres-Martínez

Working Papers from University of Chile, Department of Economics

Abstract: We develop a two period general equilibrium model with incomplete financial markets and differential information. Making endogenous the traditional informational restriction on consumption, we allow agents to obtain information from physical and financial markets. Thus, the investment in financial promises and the trade of commodities in spot markets appear as natural channels to improve the information that an agent has about the realization of future states of nature.

Keywords: Incomplete Markets; Differential information; Enlightening equilibrium. (search for similar items in EconPapers)
JEL-codes: D52 D53 D82 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2010-07
New Economics Papers: this item is included in nep-cta and nep-dge
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