Several studies have found mean reversion in monthly stock returns over long horizons. However, these studies can be challenged for several reasons, including the neglect or possible misspecification of risk premia. The current paper analyzes daily Dow returns over short horizons, which obviates...

There is a considerable tension in neo-Keynesian macroeconomics as to whether the familiar IS-LM analysis should be interpreted as a description of equilibrium or disequilibrium. The present paper shows how the IS-LM model can be used for either purpose. The first section provides the...

A supply-and-demand model of deregulated financial markets is compared to deposit-multiplier models, interest-rate reduced forms, the textbook IS-LM model, and a credit-market approach. This model is used to analyze a variety of financial events that simpler models find paradoxical: some events...