Noise Trader and the Welfare Effects of Privatization

Excessive volatility of asset prices like that generated in the 'noise trader' model of De Long et al. is one factor that plausibly might contribute to an explanation of the equity premium. We extend the De Long et al. model to allow for privatization of publicly-owned assets and assess the welfare effects of such privatization in the presence of excess volatility arising from noise traders' mistaken beliefs.

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Year of publication:	2003-05
Authors:	Grant, Simon ; Quiggin, John
Institutions:	Department of Economics, Rice University

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Series:	Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Classification:	E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005819013