Cross-sections of option prices embed the risk-neutral probability densities functions (PDFs) for the future values of … implied in option prices. Using FTSE 100 and S&P 500 options, and both power and exponential utility functions, we show that …

Suppose the nominal money supply could be cut literally overnight by, say, 20%. What would happen to prices, wages …, output? The answer can be found in 1720s France, where just such an experiment was carried out, repeatedly. Prices adjusted … instantaneously and fully on one market only, that for foreign exchange. Prices on other markets (such as commodities) as well as …