(De)stabilizing speculation on futures markets : an alternative view point.

Summary This paper offers a new interpretation for possible destabilizing effects of opening futures markets. In our model, adapted from Stein (1987), speculation on future markets reduces the likelihood of occurrence of a Rational Expectation Equilibrium. Although the equilibrium rice is less volatile after the futures market is opened ( which is usually viewed as a stabilizing effect), traders may find more difficult or even impossible to coordonate their expectations in order to implement this equilibrium.