Detemple, Jerome; Kitapbayev, Yerkin; Prieto, Rodolfo - 2023
simple exchange economy with three types of agents: regular stockholders, arbitrageurs and liquidity providers. Regular … increased stock volatility created by arbitrageurs with access to credit lines. Arbitrageurs and liquidity providers are at … least as well off. Optimal liquidity is found to be consistent with the existence of bubbles in stock and bond markets under …