On the Sources of Private Information in FX Markets

We investigate the source of information advantage in inter-dealer FX trading using data on trades and counterparty identities. In liquid dollar exchange rates, information is concentrated among dealers that trade most frequently and specialize their activity in a particular rate. In cross-rates, traders that engage in triangular arbitrage are best informed. Better-informed traders are also located on larger trading floors. In cross-rates, the ability to forecast flows explains all of the advantage of the triangular arbitrageurs. In liquid dollar rates, specialist traders can forecast both order flow and the component of exchange rate changes that is uncorrelated with flow.

Endogenous Two-Sided Markets with Repeated Transactions

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linear equations. Then, we endogenize the matching mechanism in a link formation stage that precedes the market game. When agents are sufficiently patient and link costs are low, we provide an algorithm to construct minimally connected networks that are pairwise stable with respect to the expected payoffs in the trading stage. The constructed networks are essentially efficient and consist of components with a constant buyer-seller ratio. The latter ratio increases (decreases) for a buyer (seller) that deletes one of her links in a pairwise stable component.

Africa’s prospects and South Africa’s leadership potential in the emerging markets century

This article examines Africa's role in an evolving international system where powerful emerging markets, such as bric, together with established powers are shaping economic trajectories. The specific focus is on South Africa as an aspiring leader on the African continent, and on its potential for becoming an emerging market shaping the global order together with bric and the West. It is unclear whether a changing global economy in which the postcolonial world plays a greater role will result in improved developmental prospects for Africans as African countries gradually reorient themselves from the West to the South, or whether relations with emerging markets will resemble neo-colonial ties with the West. South Africa's structural weakness, stemming from serious domestic problems of a social, political and economic nature, threatens to undermine its standing in Africa and its emerging market status.

A Preference for Mephedrone: Drug Markets, Drugs of Choice, and the Emerging “Legal High” Scene

This study focuses on individuals' preferences for mephedrone, a new psychoactive substance that has emerged in several countries. We examine the reasons for mephedrone preferences, and describe the positive and negative effects of the drug experience, route of administration and consumers' views about the legality of mephedrone. Data were collected through semi-structured interviews with 45 adults who had used mephedrone since January 2010. Respondents resided in one of two jurisdictions that were characterized by different legislative controls over mephedrone. The findings suggest the importance of macro-level drug market factors that shaped people's preferences for mephedrone. Additionally, respondents' preferences were guided by pharmacological properties that helped them conceal the effects of mephedrone in public and semi-public spaces. Respondents were not deterred by the (impending) change from legal to illicit drug. The findings have implications for the study of localized drug markets, and in particular, legislative controls over emerging legal highs.