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Financial Market Models. A Logical Assessment

Author

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  • Emil DINGA

    ("Victor Slavescu" Center for Financial and Monetary Research of the Romanian Academy, Romania)

Abstract

The paper aims to analyze, from a logical and epistemological perspective - the possibility of knowledge, on the one hand, and the testability of knowledge, on the other hand - the main models developed and (some of them) operationalized in the financial transactions market. In this context, it is proposed to classify these models according to the „target” pursued and, based either on the statements of the creators of the models in question or (if such statements are missing or only implicit in theoretical developments), according to the fundamental principle (or the basic mechanism) specific to the models examined. The paper also examines the typology of the concepts of financial market efficiency, as it results from the logical and epistemological examination of the models in question. Finally, the paper analyzes the empirical testability (in the sense of Popper's falsifiability) for each of the financial market model considered (a number of six such models).

Suggested Citation

  • Emil DINGA, 2022. "Financial Market Models. A Logical Assessment," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(4), pages 84-92.
    • Handle: RePEc:brc:brccej:v:7:y:2022:i:4:p:84-92
    as

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    References listed on IDEAS

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    1. Foster, John, 1997. "The analytical foundations of evolutionary economics: From biological analogy to economic self-organization," Structural Change and Economic Dynamics, Elsevier, vol. 8(4), pages 427-451, October.
    2. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
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    More about this item

    Keywords

    financial market; efficiency; model; testability; principle; hypothesis;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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