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Simon Grant and John Quiggin
 
''Noise Trader Risk and the Welfare Effects of Privatization''
( 2004, Vol. 5 No.9 )
 
 
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.
 
 
Keywords:
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
D8 - Information, Knowledge, and Uncertainty: General
 
Manuscript Received : Mar 24 2004 Manuscript Accepted : Apr 21 2004

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