Using historical data from 1926 to 2002, the article shows that for investors with very long horizons,(longer than 25 years), stocks were safer in the U.S. than government bonds. For investors with shorter horizons, both stocks and bonds were exposed to substantial risks, and stocks did not...

After a slow start in the 1980s, inflation-indexed government securities have gradually become more common in developed countries. A number of potential benefits arise with a government conducting part of its borrowing through inflation-indexed securities. Chief among them are better risk...

In recent years, monetary policymakers have monitored several measures of market expectations of future inflation. One of these measures is based on the yield differential between nominal and inflation indexed Treasury securities. This yield spread is also called the “breakeven inflation...

Conventional wisdom tells us that stocks tend to outperform government bonds in the long term. That is, if stocks are held long enough, they are usually better investments because their total return is likely to be higher than the return on bonds. While this view may be correct in principle, in...

The total volume of nonfinancial commercial paper outstanding peaked in the fall of 2000 and has declined rapidly ever since. By September 2002, the market had shrunk more than 50 percent. Relative to historical patterns, both the magnitude and the timing of the decline are unusual. The decline...