We theoretically analyze how index investing affects financial markets using a dynamic exchange economy with heterogeneous investors and two Lucas trees. identify effects of indexing: lockstep trading stocks increases market volatility stock return correlations but reduction in risk sharing decreases them. Overall, indexing has an ambiguous effect on the correlations. Also, investor’s welfare, ...

As background, this paper describes journal descriptor (JD) indexing, based on indexing at the journal level using only 127 descriptors, and applying statistical methods that associate this journal indexing with text words in a training set of MEDLINE® citations. These associations then form the basis for automatic indexing of documents outside the training set. The paper then presents the new ...