martingles and financial crises

when a financial crisis occurs, speculators typically get the blame whereas fundamentalists are presented as the safeguard against excessive volatility.this paper consider two types: speculators and fundamentals who have the same information. in this paper, excess volatility not only exists, but is actually fueled by fundamental trading. consequently, efficient markets are more volatile with a few speculators than with many speculators and existence of fundamentals ruins market’s liquidity and this may pose problems for traders, who intend to undertake frequent transactions.