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Working Paper
Banking reform
Journal Article
The federal government's budget surplus: Cause for celebration?
Projected surpluses in the federal government's budget have generated fanfare sometimes verging on euphoria. Because the federal government last had a surplus in 1969, a projected surplus for fiscal year 1998 and later years is being viewed as something of a milestone. Unlike policies of the last three decades that have at least paid lip service to lowering the deficit, policy options now may include ways to use the surplus. Some have called for lowering taxes and others for increasing expenditures or retiring federal government debt. ; This article discusses the importance of going beyond ...
Conference Paper
Suspension of payments and bank failures
Working Paper
Does opening a stock exchange increase economic growth?
We examine the connection between the creation of stock exchanges and economic growth with a new set of data on economic growth that spans a longer time period than generally available. We find that economic growth increases relative to the rest of the world after a stock exchange opens. Our evidence indicates that increased growth of productivity is the primary way that a stock exchange increases the growth rate of output, rather than an increase in the growth rate of physical capital. We also find that financial deepening is rapid before the creation of a stock exchange and slower ...
Journal Article
The news in financial asset returns
The notion that financial asset returns are predictors of future economic activity is widespread, but detailed analyses provide little support for financial markets? ability to reveal future economic activity. Even though the evidence on various indicators used by different researchers is mixed, the authors of this article explore the notion that financial markets reveal useful information about future economic activity. ; This article examines and answers two questions: First, what is a good way of extracting information about future economic activity from asset prices? Second, do financial ...
Journal Article
Interest rates and economic announcements
Working Paper
How important are capital and total factor productivity for economic growth?
The authors examine the relative importance of the growth of physical and human capital and the growth of total factor productivity (TFP) using newly organized data on 145 countries that span more than one hundred years for twenty-four of these countries. For all countries, only 3 percent of average output growth per worker is associated with TFP growth. This world average masks interesting variations across countries and regions. Of the nine regions, TFP growth accounts for about twenty percent of average output growth in three regions and between ten and zero percent in the other three ...
Journal Article
Is money irrelevant?
Working Paper
Index arbitrage and nonlinear dynamics between the S&P 500 futures and cash
We use a cost of carry model with nonzero transactions costs to motivate estimation of a nonlinear dynamic relationship between the S&P 500 futures and cash indexes. Discontinuous arbitrage suggests that a threshold error correction mechanism may characterize many aspects of the relationship between the futures and cash indexes. We use minute-by-minute data on the S&P 500 futures and cash indexes. The results indicate that nonlinear dynamics are important and related to arbitrage and suggest that arbitrage is associated with more rapid convergence of the basis to the cost of carry than would ...