Bubbles and Trading Volume

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type 01 Jan 2014 English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

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Authors: Florin Bidian;

doi: 10.2139/ssrn.2476267

Bubbles and Trading Volume

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Abstract

Rational bubbles in stocks can cause increases in trading volume, even after accounting for their expansionary effect on output and consumption. Trading volume increases are not caused by speculation driven by differences in beliefs. Dividend-bearing assets used to transfer resources intertemporally reduce the need for portfolio rebalancing after a bad shock. Bubbles, on the contrary, do not produce dividends and require more rebalancing after a bad shock.

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