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Financial intermediation versus stock markets in a dynamic intertemporal model

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We consider the transitions among intragenerational and alternative intergenerational financing and liquidity risk-sharing mechanisms in an overlapping generations model with endogenous levels of long-lived investmnts. The existence and characterization of a self-sustaining mechanism, stable across generations are established. The long-run equilibrium outcome in a proposal game across generations is shown to depend on the risk-aversion and propensity for early liquidity needs of agents

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp1998/98-07.pdf

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Copyright INSEAD. All rights reserved