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Business and Economics > Investments: Stocks

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Bureaucracy; Administrative Processes in Public Organizations; Corruption x
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Cover IMF Working Papers
Does Insider Trading Raise Market Volatility?
Shang-Jin Wei
and
Mr. Julan Du
This paper studies the role of insider trading in explaining cross-country differences in stock market volatility. The central finding is that countries with more prevalent insider trading have more volatile stock markets, even after one controls for liquidity/maturity of the market and the volatility of the underlying fundamentals (volatility of real output and of monetary and fiscal policies). Moreover, the effect of insider trading is quantitively significant when compared with the effect of economic fundamentals.
Keywords:
WP; insider trading index; market volatility; anti-insider-trading law; growth rate; insider trading prohibition; insider trading Sanctions Act; insider trading; insider trading activity; Stock markets; Legal support in revenue administration; Income distribution; Stocks; Asset prices; Europe; Africa
Cover IMF Working Papers
On Corruption and Capital Accumulation
Mr. V. Hugo Juan-Ramon
and
Mr. Carlos M. Asilis
Reforming economies have typically placed little attention on the impact of illegal activities on the success of reform/stabilization packages and optimal policy design. This paper aims at developing a framework in which to assess an economy’s response to alternative stabilization/reform packages as a function of the scope of corruption activities. The framework developed herein is a basic one in which only the most fundamental questions (such as the effects of anti-corruption government policies on output and welfare) are examined. The more interesting questions of the optimal design of stabilization and economic reform policies remain to be addressed in future extensions of the model. The framework also accommodates political-economy analysis, and is able to explain why, even when able to eliminate corruption activity altogether, governments may choose not to do so. Our framework differentiates between developing and developed economies according to the income share accruing to capital, as is common in the literature. In equilibrium, the effect of anti-corruption penalties on the economy’s capital stock is greater in developing countries; in particular, we find that the elasticity of the steady state average per capita stock of capital with respect to increases in anti-corruption penalties is increasing in the income share accruing to capital. The model also shows that reductions in public good output, as a fraction of the economy’s total expenditure, lead to larger welfare decreases when in the presence of corruption.
Keywords:
WP