The role of the IMF and the World Bank in the former Eastern Bloc countries
Although the main responsibility for carrying out economic reforms in the countries of Central and Eastern Europe lies with these countries themselves, the transformation of the Soviet-style economic system into a market economy must be made easier by support from abroad. In this the International Monetary Fund and the World Bank will play an important part.
The EBRD: Redundant, or an important actor in the transformation of Eastern Europe?
Now in its second year of operation, the European Bank for Reconstruction and Development was the first new institution set up by the West to cope with the historical challenge of helping to transform the centrally planned economies of Eastern Europe into market economies. Strongly criticized for its lack of funds and its redundant profile when compared to the World Bank and the European Investment Bank, the “European Bank” is still struggling to assume an independent role in the transformation process and remains a controversial institution.
When to Cross the Spread? Trading in Two-Sided Limit Order Books
In this paper the problem of optimal trading in illiquid markets is addressed when the deviations from a given stochastic target function describing, for instance, external aggregate client flow are penalized. Using techniques of singular stochastic control, we extend the results of [F. Naujokat and N. Westray, Math. Financ. Econ., 4 (2011), pp. 299--335] to a two-sided limit order market with temporary market impact and resilience, where the bid ask spread is now also controlled. In addition to using market orders, the trader can also submit orders to a dark pool. We first show existence and uniqueness of an optimal control. In a second step, a suitable version of the stochastic maximum principle is derived which yields a characterization of the optimal trading strategy in terms of a nonstandard coupled forward-backward stochastic differential equation (FBSDE). We show that the optimal control can be characterized via buy, sell, and no-trade regions. The new feature is that we now get a nondegenerate no-...