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The paper examines the impact of heterogeneous trading technologies for households on asset prices and the distribution of wealth. Author distinguishes between passive traders who hold fixed portfolios of stocks and bonds, and active traders who adjust their portfolios to changes in expected returns. To solve the model, an optimal consumption sharing rule is derived that does not depend on the trading technology, and an aggregation result for state prices. This solves the equilibrium prices and allocations without having to search for market-clearing prices in each asset market separately. In contrast to existing models with heterogeneous agents, this model matches the high volatility of returns and the low volatility of the risk-free rate.
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