Trading Fees and Slow-Moving Capital
Author | : Adrian Buss |
Publisher | : |
Total Pages | : 56 |
Release | : 2015 |
ISBN-10 | : OCLC:917247538 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Trading Fees and Slow-Moving Capital written by Adrian Buss and published by . This book was released on 2015 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: In some situations, investment capital seems to move slowly towards profitable trades. We develop a model of a financial market in which capital moves slowly simply because there is a proportional cost to moving capital. We incorporate trading fees in an infinite-horizon dynamic general-equilibrium model in which investors optimally and endogenously decide when and how much to trade. We determine the steady-state equilibrium no-trade zone, study the dynamics of equilibrium trades and prices and compare, for the same shocks, the impulse responses of this model to those of a model in which trading is infrequent because of investor inattention.