International financial markets are said to be excessively volatile due to destabilizing speculation and excessive … liquidity, which minimizes excess volatility. There are two effects when imposing a transactions tax. Both reduce excess … volatility in highly speculative markets when tax rates are small. The total tax effect then is unambiguous. However, in illiquid …

Inspired by the theory of social imitation (Weidlich 1970) and its adaptation to financial markets by the Coherent … our dynamic stock price model, we develop a two factor general equilibrium model for pricing derivative securities. The … two factors of our model are the stock price and a market polarization variable which determines the level of overreaction …