The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B
The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B
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In our eReader you can find the full English version of the book. Read The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B Online - link to read the book on full screen. Our eReader also allows you to upload and read Pdf, Txt, ePub and fb2 books. In the Mini eReder on the page below you can quickly view all pages of the book - Read Book The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B
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To quickly assess the difficulty of the text, read a short excerpt:
044 . 057 . 006 . 041 . 053 ECp'^) . 079 . 047 . 031 . 085 . 049 . 036 a{c, )/E{c, ) . 090 . 094 . 096 . 094 . 095 . 096 Table 4 repeats the experiment of Table 3 under the assumption that borrowers and lenders both pay a transactions cost in the bond market. As one might anticipate from proposition 1, the interest rate is much higher than when only the borrower pays, and the equity premium is correspondingly lower.
To understand these results, notice that transactions costs have both a direct ...and indirect affect on the premium. The direct effect is that a lender requires a higher rate of return as costs increase, and conversely for the borrower. When only the borrower pays the trading cost, the decrease in the demand for funds causes the equilibrium borrowing rate to fall. The indirect effect is 22 that higher costs reduce the volume of trade. ^* This indirect effect increases consumption volatility, and hence the predicted premium. For the parameters considered, the direct effect dominates.
What to read after The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B?
You can find similar books in the "Read Also" column, or choose other free books by John Eaton to read onlineMoreLess
To quickly assess the difficulty of the text, read a short excerpt:
044 . 057 . 006 . 041 . 053 ECp'^) . 079 . 047 . 031 . 085 . 049 . 036 a{c, )/E{c, ) . 090 . 094 . 096 . 094 . 095 . 096 Table 4 repeats the experiment of Table 3 under the assumption that borrowers and lenders both pay a transactions cost in the bond market. As one might anticipate from proposition 1, the interest rate is much higher than when only the borrower pays, and the equity premium is correspondingly lower.
To understand these results, notice that transactions costs have both a direct ...and indirect affect on the premium. The direct effect is that a lender requires a higher rate of return as costs increase, and conversely for the borrower. When only the borrower pays the trading cost, the decrease in the demand for funds causes the equilibrium borrowing rate to fall. The indirect effect is 22 that higher costs reduce the volume of trade. ^* This indirect effect increases consumption volatility, and hence the predicted premium. For the parameters considered, the direct effect dominates.
What to read after The Effects of Incomplete Insurance Markets And Trading Costs in a Consumption B?
You can find similar books in the "Read Also" column, or choose other free books by John Eaton to read onlineMoreLess
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