A Simple Model of Useless SpeculationMurray C. Kemp, Hans-Werner Sinn
NBER Working Paper No. 3513 The paper presents a general equilibrium model of a pure exchange economy with stochastic endowment in which speculation is profitable and stabilizes prices, but is useless from a welfare point of view. Reconciling the Siegel paradox with the theory of incomplete markets we show that banning speculation by closing the forward exchange market may increase social welfare.
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Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w3513 Published: C and S working Paper , December 1995, Japanese Economic Review 51, (2000), pp. 85-95. Users who downloaded this paper also downloaded these:
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