The Instability of Markets
Posted: 25 Aug 1998
Abstract
Recent developments in the global liberalization of equity and currency markets, coupled to advances in trading technologies, are making markets increasingly interdependent. This increased fluidity raises questions about the stability of the international financial system. In this paper, we show that as couplings between stable markets grow, the likelihood of instabilities is increased, leading to a loss of general equilibrium as the system becomes increasingly large and diverse.
JEL Classification: D59, F01
Suggested Citation: Suggested Citation
Hogg, Tad and Huberman, Bernardo A. and Youssefmir, Michael, The Instability of Markets. Available at SSRN: https://ssrn.com/abstract=6541
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