resulting volatility can induce risk-averse transactors who face transaction costs to desert these markets altogether. Thus … thinness and the consequent price volatility may become joint self-perpetuating features of an equity market, whatever the … volatility of asset fundamentals. If, however, appropriate incentive schemes are adopted to encourage entry of additional …

transparency or illiquidity. However, several of the important announcements concerning the international swap programs …

accumulation only worsens this problem. Increasing the volatility of interest rates through habits partly reduces the size of these … positions but at the cost of introducing extreme volatility in asset holdings. Across these simulations we find no presumption … the required positions, worsens their volatility and in some cases produces instability in debt holdings. We conclude that …