Pricing, liquidity and the control of dynamic systems in finance and economics
AbstractThe paper discusses various practical consequences of treating economics and finance as an inherently dynamic and chaotic system. On the theoretical side this looks at the general applicability of the market-making pricing approach to economics in general. The paper also discuses the consequences of the endogenous creation of liquidity and the role of liquidity as a state variable. On the practical side, proposals are made for reducing chaotic behaviour in both housing markets and stock markets.
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Bibliographic InfoPaper provided by arXiv.org in its series Papers with number 1105.5503.
Date of creation: May 2011
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Web page: http://arxiv.org/
Other versions of this item:
- Willis, Geoff, 2011. "Pricing, liquidity and the control of dynamic systems in finance and economics," MPRA Paper 31137, University Library of Munich, Germany.
- D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
- G1 - Financial Economics - - General Financial Markets
- D40 - Microeconomics - - Market Structure and Pricing - - - General
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