Human Capital, Endogenous Information Acquisition, and Home Bias in Financial Markets

2010 ◽  
Author(s):  
Isaac Ehrlich ◽  
Jong Kook Shin ◽  
Yong Yin
Keyword(s):  
Human Capital ◽  
Financial Markets ◽  
Information Acquisition ◽  
Home Bias ◽  
Endogenous Information

scholarly journals Private Information, Human Capital, and Optimal “Home Bias” in Financial Markets

2011 ◽  
Vol 5 (3) ◽  
pp. 255-301 ◽  
Author(s):  
Isaac Ehrlich ◽  
Jong Kook Shin ◽  
Yong Yin
Keyword(s):  
Human Capital ◽  
Financial Markets ◽  
Private Information ◽  
Home Bias

scholarly journals Welfare Reversals in a Monetary Union

2014 ◽  
Vol 6 (4) ◽  
pp. 246-290 ◽  
Author(s):  
Stéphane Auray ◽  
Aurélien Eyquem
Keyword(s):  
Financial Markets ◽  
Monetary Union ◽  
Risk Sharing ◽  
Home Bias ◽  
Scale Model ◽  
Fiscal Policies ◽  
Medium Scale ◽  
Asymmetric Shocks ◽  
Inflation Rates ◽  
Carry Over

We show that welfare can be lower under complete financial markets than under autarky in a monetary union with home bias, sticky prices, and asymmetric shocks. Such a monetary union is a second-best environment in which the structure of financial markets affects risk-sharing but also shapes the dynamics of inflation rates and the welfare costs from nominal rigidities. Welfare reversals arise for a variety of empirically plausible degrees of price stickiness when the Marshall-Lerner condition is met. These results carry over a model with active fiscal policies, and hold within a medium-scale model, although to a weaker extent. (JEL E31, E52, E62, F33, F41)

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