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 University Library of Munich, Germany in its series MPRA Paper with number 31137.
Date of creation: 26 May 2011
Date of revision:
dynamic; chaotic; liquidity; market-microstructure; post-keynesian;
Other versions of this item:
- Geoff Willis, 2011. "Pricing, liquidity and the control of dynamic systems in finance and economics," Papers 1105.5503, arXiv.org.
- D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
- G1 - Financial Economics - - General Financial Markets
- D40 - Microeconomics - - Market Structure and Pricing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-04 (All new papers)
- NEP-HPE-2011-06-04 (History & Philosophy of Economics)
- NEP-MST-2011-06-04 (Market Microstructure)
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