On the Social Cost of Transparency in Monetary Economies
AbstractI study a class of models commonly used to motivate monetary exchange, extended to include a physical asset whose expected short-run return is subject to exogenous news events, but whose expected long-run return is independent of this information. I show that there are circumstances in which the nondisclosure of news by an asset manager is welfare-improving. When nondisclosure is infeasible, the framework admits a role for government debt. The theory is used to interpret the nondisclosure practices of reputable financial agencies and suggests caveats for legislation designed to promote financial market transparency.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 980.
Date of creation: 2010
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Other versions of this item:
- David Andolfatto, 2010. "On the social cost of transparency in monetary economies," Working Papers 2010-001, Federal Reserve Bank of St. Louis.
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- Williamson, Stephen D. & Wright, Randall, 2010.
"New Monetarist Economics: Models,"
21030, University Library of Munich, Germany.
- Gary B. Gorton & Guillermo Ordonez, 2012.
NBER Working Papers
17771, National Bureau of Economic Research, Inc.
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"Optimal disclosure policy and undue diligence,"
ECON - Working Papers
045, Department of Economics - University of Zurich.
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