TY  - JOUR
AU  - Kemp,Murray C.
AU  - Sinn,Hans-Werner
TI  - A Simple Model of Useless Speculation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3513
PY  - 1990
Y2  - November 1990
UR  - http://www.nber.org/papers/w3513
L1  - http://www.nber.org/papers/w3513.pdf
N1  - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
AB  - 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.
ER  -