Fida Karam

Insider Trading with Different Market Structures

The recent theoretical research on the informational effect of insider trading in the spirit of Kyle (1985) and Jain and Mirman (1999) was mainly interested in the interaction between the financial and real decisions of the insider, taking into consideration different market structures in both the real and financial markets. However, none investigated the importance of the competition structure in the financial market modeled alone, on the dissemination of information. In this paper, we highlight the effect of the competition structure in the financial market on information revelation. For this purpose, we first extend Jain and Mirman (1999) to incorporate: (i) Cournot competition among the insiders (Model I) and (ii) Stackelberg competition between the insiders (Model II). We then add a real market to Model II, where the publicly-owned firm is a quantity-setting monopolist (Model III). The last model allows to investigate where does the real market interfere relatively to Model II. We show how the equilibrium outcomes are affected by each of the market structure and we perform a comparative statics analysis between the models.

When Migrant Remittances Are Not Everlasting: How Can Morocco Make Up?

This paper builds a dynamic computable general equilibrium model of the Moroccan economy that investigates the linkages that transmit the influence of remittances to households and economic sectors. The model shows that the linkage between the real estate sector and other sectors in a general equilibrium context gives interesting results. Given that the real estate sector uses intermediary inputs from other sectors, a drop of remittances will negatively affect the overall economy in contrast to the little impact such a drop will have in partial equilibrium. Hence, the channeling of investment from real estate to productive sectors is unexpectedly harmful. Positive effects arise only from an improvement in the country risk premium and from a reduction of international transfer costs.

On the determinants of trade in services: evidence from the MENA region

This article examines the determinants of aggregate flows of service trade in MENA countries using an adapted version of the gravity model and a panel data set covering the 2000 to 2009 period for 21 countries and 10 sectors. A new determinant of trade performance is introduced: the number of bound commitments undertaken by a sector in the WTO as well as the availability of those commitments by mode of supply. The results show that being a WTO member boosts trade in services. In addition, the number of bound commitments increases exports, imports and trade in services. This positive and significant effect remains robust even after controlling for several econometric issues, namely, the selection bias related to the WTO membership and the endogeneity of commitments.11. We are grateful to the editor Mark Taylor and two anonymous referees for providing valuable comments and suggestions. We would also like to thank the participants to the ERF 18th Annual Conference and to the 32nd Annual Meeting of the Middle East Economic Association (MEEA). This work benefited from the financial support of Economics Research Forum (ERF). It does not reflect the Forum’s opinion.

Insider trading in a two-tier real market structure model

This paper investigates the real and financial effects of insider trading in the spirit of Jain and Mirman (2000). Unlike the existing literature, the production of one real good is costly and depends mainly on the price of an intermediate good produced locally by a privately owned firm. The results show that the output level of the final good chosen by the insider as well as the price of the intermediate good set by the privately owned firm are both higher than it would be in the absence of insider trading. Furthermore, the parameters of both real markets affect the stock price. Next, a second insider, operating in the firm producing the final good, is added to the benchmark model. Competition among insiders decreases the production of the final good by the publicly owned firm and the price of the intermediate good with respect to the benchmark model. Moreover, it affects the insiders’ trades and increases the amount of information revealed in the stock price.

How did wars dampen trade in the MENA region

ABSTRACT The article investigates the impact of wars on trade in the Middle East and North African region. Using an augmented gravity model that controls for the endogeneity problem in our estimation, we introduce a war variable and distinguish between different types of conflicts. The results show that wars have a significantly negative impact on exports, imports and trade. Civil conflicts hinder exports, imports and trade significantly. The disaggregated version of the gravity model shows that non-state conflicts have a detrimental effect on bilateral trade flows in manufacturing, and that none of the conflicts do affect trade in services. We also find that, on average, a conflict is equivalent to a tariff of 5% of the value of trade.

Insider Trading in a Two-Tier real market structure model

This paper investigates the real and financial effects of insider trading in the spirit of Jain and Mirman (2000). Unlike the existing literature, the production of one real good is costly and depends mainly on the price of an intermediate good produced locally by a privately owned firm. The results show that the output level of the final good chosen by the insider as well as the price of the intermediate good set by the privately owned firm are both higher than it would be in the absence of insider trading. Furthermore, the parameters of both real markets affect the stock price. Next, a second insider, operating in the firm producing the final good, is added to the benchmark model. Competition among insiders decreases the production of the final good by the publicly owned firm and the price of the intermediate good with respect to the benchmark model. Moreover, it affects the insiders’ trades and increases the amount of information revealed in the stock price.