The Case for Incomplete Markets

Viktor Tsyrennikov, Timothy Cogley (), Thomas Sargent, David Easley and Lawrence Blume

No 1098, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: We propose a new welfare criterion that allows us to rank different 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 some restrictions on financial markets are desirable according to our welfare criterion.

Date: 2014
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Journal Article: A case for incomplete markets (2018)
Working Paper: A Case for Incomplete Markets (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:1098

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