Government Intervention through Informed Trading in Financial Markets
Shao'an Huang,
Zhigang Qiu (),
Gaowang Wang and
Xiaodan Wang
MPRA Paper from University Library of Munich, Germany
Abstract:
We develop a theoretical model of government intervention in which a government with private information trades strategically with other market participants to achieve its policy goal of stabilizing asset prices. When the government has precise information and cares much about its policy goal, both the government and the informed insider engage in reversed trading strategies, but they trade against each other. Government intervention can improve both market liquidity and price efficiency, and the effectiveness of government intervention depends crucially on the information quality of the government.
Keywords: government intervention; trading; price stability; price efficiency (search for similar items in EconPapers)
JEL-codes: G14 G18 (search for similar items in EconPapers)
Date: 2021-05-17
New Economics Papers: this item is included in nep-gth and nep-mst
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/107783/1/MPRA_paper_107783.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/107869/8/MPRA_paper_107869.pdf revised version (application/pdf)
Related works:
Journal Article: Government intervention through informed trading in financial markets (2022) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:107783
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().