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Topic
Publication year
Government Intervention and Information Aggregation by Prices
Resource type
Authors/contributors
- Bond, Philip (Author)
- Goldstein, Itay (Author)
Title
Government Intervention and Information Aggregation by Prices
Abstract
Governments intervene in firms' lives in a variety of ways. To enhance the efficiency of government intervention, many researchers and policy makers call for governments to make use of information contained in stock market prices. However, price informativeness is endogenous to government policy. We analyze government policy in light of this endogeneity. In some cases, it is optimal for a government to commit to limit its reliance on market prices to avoid harming the aggregation of information into market prices. For similar reasons, it is optimal for a government to limit transparency in some dimensions.
Publication
The Journal of Finance
Volume
70
Issue
6
Pages
2777-2812
Date
2015
Citation
Bond, P., & Goldstein, I. (2015). Government Intervention and Information Aggregation by Prices. The Journal of Finance, 70, 2777–2812.
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