Can public information promote market stability?

Binbin Chen, Shancun Liu and Qiang Zhang

Economics Letters, 2016, vol. 143, issue C, 103-106

Abstract: We study the effect of public information revealing part of underlying fundamentals on market stability. It shows that accurate public information reduces the uncertainty faced by informed traders and increases their responsiveness to private information and expected volume. The reverse trading and multiple equilibria arise under lower public information precision and they disappear when public information precision increases sufficiently.

Keywords: Information disclosure; Public information; Multiple equilibria; Reverse trading (search for similar items in EconPapers)
JEL-codes: D40 D82 G10 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:143:y:2016:i:c:p:103-106

DOI: 10.1016/j.econlet.2016.04.008

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