Imperfect financial markets and investment inefficiencies Elias Albagli, Christian Hellwig and Aleh Tsyvinski
By: Albagli, Elias
.
Contributor(s): Hellwig, Christian | Tsyvinski, Aleh.
Material type: 
ArticleSubject(s): MERCADOS FINANCIEROS | INVERSIONES | VOLATILIDAD FINANCIERA | MODELOS ECONOMETRICOS
In:
The American Economic Review v. 113, n. 9, September 2023, p. 2323-2354Summary: We analyze the consequences of noisy information aggregation for investment. Market imperfections create endogenous rents that cause overinvestment in upside risks and underinvestment in downside risks. In partial equilibrium, these inefficiencies are particularly severe if upside risks are coupled with easy scalability of investment. In general equilibrium, the shareholders' collective attempts to boost value of individual firms leads to a novel externality operating through price that amplifies investment distortions with downside risks but offsets distortions with upside risks.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 234/2023/9-1 (Browse shelf) | Available | OP 234/2023/9-1 |
Browsing IEF Shelves Close shelf browser
| No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | No cover image available | ||
| OP 234/2023/8-1 The political economy of international regulatory cooperation | OP 234/2023/8-2 Who benefits from state corporate tax cuts? | OP 234/2023/9 The American Economic Review | OP 234/2023/9-1 Imperfect financial markets and investment inefficiencies | OP 234/2023/9-2 The macroeconomics of the Greek depression | OP 234/2024/1 The American Economic Review | OP 234/2024/10 The American Economic Review |
Resumen.
Bibliografía.
We analyze the consequences of noisy information aggregation for investment. Market imperfections create endogenous rents that cause overinvestment in upside risks and underinvestment in downside risks. In partial equilibrium, these inefficiencies are particularly severe if upside risks are coupled with easy scalability of investment. In general equilibrium, the shareholders' collective attempts to boost value of individual firms leads to a novel externality operating through price that amplifies investment distortions with downside risks but offsets distortions with upside risks.
There are no comments for this item.