The more recent asset market literature on flexible exchange rates seems to share the opinion that it is not possible to treat the stock-flow interaction on the adjustment path to a new long-run equilibrium adequately in continuous time. The present paper discloses some severe inconsistencies...

This paper examines necessary conditions for a demand for new information to exist. In this one-period model, investors are homogeneous, have logarithmic utility, and must decide on information acquisition before trading starts, and without knowing what other investors will do. We examine the...

A costless, fully revealing signalling equilibrium is derived from two easily understandable conditions. The outsidet-protection condition states that the outsiders relate the price which they offer to pay for a security inversely to the supply of this security which they interpret as a quality...