Price Discovery in the Foreign Currency Futures and Spot Market

In this paper, we compare price discovery in the foreign exchange futures and spot markets during a period in which the spot market was less transparent but had higher volume than the futures market. We develop a foreign exchange futures order flow measure that is a proxy for the order flow observed by Chicago Mercantile Exchange pit traders. We find that both foreign currency futures and spot order flow contain unique information relevant to exchange rate determination. When we measure contributions to price discovery using the methods of Hasbrouck (1995) and Gonzalo and Granger (1995), we obtain results consistent with our order flow findings. Taken together, our evidence suggests that the amount of information contained in currency futures prices in 1996 is much greater than one would expect based on relative market size. Using data from 2006, we obtain quite different results, perhaps because of an increase in spot market transparency. In particular, we find in our more recent sample that the spot market has the dominant information share

The Origins of the EPRDF and the Prospects for the Prosperity Party

This paper presents the historical development of the authoritarian Ethiopian People’s Revolutionary Democratic Front (EPRDF) with particular attention to its origins in civil war and its use of multi-national federal structures to balance centralizing dynamics and demands for regional autonomy. It argues that the reform process launched by Prime Minister Abiy and the formation of the successor Prosperity Party failed to overcome the challenges and political logics that undermined the EPRDF. The article concludes by examining the prospects of the center to manage these contradictions and bind together the distinct and highly polarized regions and political interests. </jats:p