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SUMMARY:(In)Efficient Asset Trade\, Differential Borrowing Cost And Centra
 l Bank Policy
DTSTART:20151103T120000
DTEND:20151103T130000
DTSTAMP:20260413T224143Z
UID:ed852a7e2c95db9b6966ef444f387e047915fb79a56985c790edc828
CATEGORIES:Conferences - Seminars
DESCRIPTION:Tobias DIELER (Postdoc\, SFI@EPFL)\nThis paper studies how dif
 ferential borrowing cost can lead to inefficient real investment due to th
 e feedback effect of asset trade. In addition\, it designs a Central  Ban
 k policy which can alleviate the inefficiency. Therefore\, I consider a mo
 del in which a large asset trader has superior information about a firm's 
 investment  opportunity. The large trader\, through his purchase of asset
 s from uninformed shareholders\, signals (separating equilibrium) or does 
 not signal (pooling  equilibrium) available information. Consequently\, t
 he asset price reflects available information in a separating equilibrium 
 and does not in a pooling equilibrium. The firm's manager bases the invest
 ment decision on the asset price. If the asset price is (not) revealing av
 ailable information\, the manager adopts an (in)efficient level of investm
 ent. The welfare analysis shows that information revelation is always valu
 able and hence the separating equilibrium welfare dominates the pooling  
 equilibrium. Then there exists a Central Bank policy which decreases the l
 arge trader's gains from asymmetric information such that the inefficient 
 pooling  equilibrium ceases to exist.
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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