Template-Type: ReDIF-Paper 1.0
Title: The Relevance of Financial Policy
Author-Name: J. Detemple
Author-Name: P. Gottardi
Author-Name: H. M. Polemarchakis

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Abstract: When the asset market is incomplete, equilibrium allocations are not 
 invariant to changes in the financial policies of firms: in the presence of 
 secondary assets, such as options, whose payoffs depend nonlinearly on the 
 price of equity, the range of attainable reallocations of revenue varies as 
 a firm alters its position in the asset market. Corporate financial policy 
 is thus relevant. When assets are nominal, monetary policy implemented 
 through open market operations is effective.
Series: Sonderforschungsbereich 303, University of Bonn, Germany

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Creation-Date: 1989-08
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Handle: RePEc:bon:bonsfa:262