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Noise Trader Risk and the Political Economy of Privatization

Author

Listed:
  • Grant, S.

    (Tilburg University, Center For Economic Research)

  • Quiggin, J.

Abstract

The 'noise trader' model of De Long et al. provides a plausible account of the determination of the equity premium.Extension of the model to allow for privatization of publicly-owned assets yields insights into the positive political economy of privatization and into the normative question of how policies should be evaluated in the presence of mistaken beliefs.

Suggested Citation

  • Grant, S. & Quiggin, J., 2001. "Noise Trader Risk and the Political Economy of Privatization," Discussion Paper 2001-104, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:d078de12-794d-4bb4-b230-58aef5f55902
    as

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    File URL: https://pure.uvt.nl/portal/files/540852/104.pdf
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    References listed on IDEAS

    as
    1. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
    2. Mankiw, N. Gregory, 1986. "The equity premium and the concentration of aggregate shocks," Journal of Financial Economics, Elsevier, vol. 17(1), pages 211-219, September.
    3. De Long, J Bradford & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1990. "Noise Trader Risk in Financial Markets," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 703-738, August.
    4. Simon Domberger, 1995. "What Does Privatisation Achieve?-A Comment on Quiggin," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(2), pages 43-47.
    5. John Quiggin, 1995. "Does Privatisation Pay?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(2), pages 23-42.
    6. Thomas Palley, 1999. "Speculation and Tobin taxes: Why sand in the wheels can increase economic efficiency," Journal of Economics, Springer, vol. 69(2), pages 113-126, June.
    7. John Quiggin, 1995. "Does Privatisation Pay?-A Reply to Domberger," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(2), pages 48-49.
    8. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    risk; privatization; political economy; noise trader;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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