Marco Pagano

The way in which securities are traded is very different from the idealized picture of a frictionless and self-equilibrating market offered by the typical finance textbook. In Market Liquidity, Thierry Foucault, Marco Pagano, and Ailsa Röell offer a more accurate take on the liquidity of securities markets, its determinants, and its effects. They start from the assumption that not everyone is present at all times simultaneously on the market, and that even the limited number of participants who are have quite diverse information about the security's fundamentals. As a result, the order flow is a complex mix of information and noise, and a consensus price only emerges gradually over time as the trading process evolves and the participants interpret the actions of other traders. Thus, a security's actual transaction price may deviate from its fundamental value, as it would be assessed by a fully informed set of investors. Market Liquidity takes these deviations seriously, and explains why and how they emerge in the trading process and are eventually eliminated. Drawing on the analytical tools and empirical methods from a well-defined field within financial economics--market microstructure--the authors confront many striking phenomena in securities markets, from liquidity changes over time to temporary deviations from asset fair values. In the fully revised second edition of Market Liquidity, Foucault, Pagano, and Röell bring readers up to speed on recent changes in market structures and financial regulation. New chapters cover the relationship between financial instability and market liquidity, as well as the role and effects of algorithmic and high-frequency trading. Including new illustrative examples of market malfunction and novel insights from recent research on security markets, Market Liquidity provides a comprehensive and authoritative account on market microstructure. To access the companion website, which includes student and instructor resources, please visit https://global.oup.com/us/companion.websites/9780199936243/

Labor income risk is key to the welfare of most people and this risk is mainly insured 'within the firm' and by public institutions, rather than by financial markets. Risk Sharing within the Firm: A Primer starts by asking why such insurance is provided within the firm, and what determines its boundaries. It identifies four main constraining factors: availability of a public safety net, moral hazard on the employees' side, moral hazard on the firms' side, and workers' wage bargaining power. These factors explain three empirical regularities: family firms provide more employment insurance than nonfamily firms; the former pay lower real wages, and firms provide less employment insurance where public unemployment benefits are more generous. This monograph also explores the connection between risk sharing and firms' capital structure. It concludes by showing that risk sharing within firms has declined steadily in the last three decades, and by discussing the financial, competitive, technological and institutional developments that may have conjured this outcome.

The way in which securities are traded is very different from the idealized picture of a frictionless and self-equilibrating market offered by the typical finance textbook. Market Liquidity offers a more accurate and authoritative take on liquidity and price discovery. The authors start from the assumption that not everyone is present at all times simultaneously on the market, and that even the limited number of participants who are have quite diverse information about the security's fundamentals. As a result, the order flow is a complex mix of information and noise, and a consensus price only emerges gradually over time as the trading process evolves and the participants interpret the actions of other traders. Thus a security's actual transaction price may deviate from its fundamental value, as it would be assessed by a fully informed set of investors. This book takes these deviations seriously, and explains why and how they emerge in the trading process and are eventually eliminated. The authors draw on a vast body of theoretical insights and empirical findings on security price formation that have accumulated in the last thirty years, and have come to form a well-defined field within financial economics known as 'market microstructure.' Focusing on liquidity and price discovery, they analyze the tension between the two, pointing out that when price-relevant information reaches the market through trading pressure rather than through a public announcement, liquidity suffers. The book also confronts many puzzling phenomena in securities markets and uses the analytical tools and empirical methods of market microstructure to understand them. These include issues such as why liquidity changes over time, why large trades move prices up or down, and why these price changes are subsequently reversed, why we see concentration of securities trading, why some traders willingly disclose their intended trades while others hide them, and why we observe temporary deviations from arbitrage prices.

Ten years have passed since the start of the monetary union. The 2009 report of the Economic Policy Group analyses the economic record of the countries that joined at the start and how it has been affected by the common currency and common monetary policy. The areas covered are monetary policy, fiscal policy, financial integration, foreign trade and foreign direct investment. Denmark, Sweden and the UK have chosen not to join the monetary union. The report also compares their economic record to that of the euro countries, and assesses if the record would have been different had the three outsiders joined the monetary union from the start. The authors are professors Harry Flam (chairman), Antonio Fatás, Steinar Holden, Tullio Jappelli, Ilian Mihov, Marco Pagano and Charles Wyplosz.

Det har gått tio år sedan EU:s monetära union bildades. 2009 års Konjunkturråds-rapport analyserar den ekonomiska utvecklingen i de länder som vid starten anslöt sig till den monetära unionen och hur de har påverkats av den gemen-samma valutan och penningpolitiken. De områden som behandlas är penning-politiken, finanspolitiken, den finansiella integrationen, samt utrikeshandeln och direktinvesteringarna. Danmark, Sverige och Storbritannien har valt att stå utanför den monetära unionen. Rapporten analyserar också hur deras ekonomier har utvecklats jämfört med euroländernas, och bedömer om utvecklingen hade varit annorlunda ifall de tre länderna hade deltagit i den monetära unionen från början. Författare är professorerna Harry Flam (Konjunkturrådets ordförande), Antonio Fatás, Steinar Holden, Tullio Jappelli, Ilian Mihov, Marco Pagano och Charles Wyplosz.