Title data
Baumann, Michael Heinrich ; Baumann, Michaela ; Erler, Alexander:
Limitations of Stabilizing Effects of Fundamentalists Facing Positive Feedback Traders.
2017
Event: The Sixteenth Annual European Economics and Finance Society Conference 2017
, 22.06.2017-25.06.2017
, University of Ljubljana, Ljubljana, Slovenia.
(Conference item: Conference
,
Speech
)
This is the latest version of this item.
Project information
Project title: |
Project's official title Project's id Promotionsstipendium No information |
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Project financing: |
Bundesministerium für Bildung und Forschung Hanns-Seidel-Stiftung |
Abstract in another language
We analyze financial interactions between fundamentalists and chartists within a heterogeneous agent model, focusing on discovering whether the presence of fundamentalists is enough to stabilize prices. In contrast to related work, which is based on simulations, we analytically prove that the presence of fundamentalists is not sufficient to avoid asset price bubbles. The behavior of trend followers can result in exploding prices irrespective of fundamentalists' investment decisions. We derive the upper boundaries for positive feedback traders' investments necessary to avoid exploding prices. In this situation, intervention measures might be necessary in order to stabilize stock/asset markets.
Further data
Available Versions of this Item
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Limitations of Stabilizing Effects of Fundamentalists Facing Positive Feedback Traders. (deposited 29 Jun 2017 08:57)
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Limitations of Stabilizing Effects of Fundamentalists Facing Positive Feedback Traders. (deposited 29 Jun 2017 08:58)
- Limitations of Stabilizing Effects of Fundamentalists Facing Positive Feedback Traders. (deposited 29 Jun 2017 08:59) [Currently Displayed]
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Limitations of Stabilizing Effects of Fundamentalists Facing Positive Feedback Traders. (deposited 29 Jun 2017 08:58)