Journal of Advances in Economics and Finance

10

Authors: Leonard F.S. Wang

In this paper, we extend Jain and Mirman (2000, 2002), Daher and Mirman (2006, 2007), Wang et al. (2009) and Wang and Wang (2010) on modeling insider trading under Cournot duopoly competition, but focus on changes in the financial side by introducing more owners as insiders, all of whom possess the same inside information and can trade in the stock market. We find that in reality, the output of listed firm decreases but quantity produced by other firm increases, though total output becomes less. Market makers are less responsive to both signals from real and financial sides, but will set stock prices higher with zero signals. The manager and each owner will order fewer stocks in the financial side, but the total order flow still depends upon the realized values of inside information. As the number of insiders increases, the profits of the manager and each owner will decrease correspondingly, so does the variance of the observed inside information. If the number approaches infinity, then all insiders’ profits will also reach zero, and at the same time, there is no variance for the inside information. That is to say, all inside information is revealed to the public so the stock market is perfectly

15

Authors: Solomon Abayomi Olakojo

Government revenue in most African countries is based on export proceeds from few primary commodities. This limits their ability to manoeuvre in case of negative exogenous price shocks, with undesired effects on economic growth. This study, therefore, investigates the effect of primary commodity prices on long-run growth of 24 primary commodity-based African economies between 1980 and 2015. A neoclassical growth model, complimented with Keynesian national income identity, was estimated with Pooled Mean Group heterogeneous panel data regression. The result reveals a significant positive inelastic effect of primary commodity export prices on economic growth in the long run, especially among the less diversified African countries. Thus, Africa has less to gain from export prices increase in the long run. Hence, there is a need for African countries to intensify efforts at diversifying production and export base to minimise the impact of negative price shocks on their long run growth.