# Inelastic market hypothesis




## [In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686935) Gabaix Koijen - 2020-2021




## [Mike Green Shatters The Myth About Passive Investing — Down the Middle with DiMartino Booth](https://www.youtube.com/watch?v=FPj60vU-zx4&list=WL&index=9)

min 40
multiplier is 2 for active
multiplier is 17 now

**multiplier is 5 according to Gabaix**

- [Mike Green: Stock Markets Are Less Efficient, and More 'Inelastic.' What does that mean?](https://www.youtube.com/watch?v=9Ij8CdE0WP8&list=WL&index=3)

passive becomes more volatile as the it becomes inelastic - inflows/leverage come in
market crash - example - XIV crash
example - an order to buy an index, then a market-maker needs to buy 5perc allocation to Apple
no fighting for information?!
not according stock's market cap, but just a fraction


- [Lars Petersen - Sharpening the arithmetic](https://research-api.cbs.dk/ws/portalfiles/portal/60084093/lasse_heje_pedersen_sharpening_the_arithmetic_of_active_management_publishersversion.pdf)

## [The Inelastic Market Hypothesis: A Microstructural Interpretation - Jean-Philippe Bouchaud](https://arxiv.org/abs/2108.00242) 2021

## Isichenko 2023 [Inelastic Stock Market Response to Capital Flows, Conservation of Money, and the Paradox of Investing](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4473754)⏎
⏎
2021 [Costly Trading](https://arxiv.org/pdf/2110.15239.pdf) Michael Isichenko

# Parents

* Short-run versus long-run - T&M
* Liquidity in Markets