Recent explanation of monetary policy and its effect have centered upon a non-cooperative game involving the monetary authority and the private sector. Notably absent from the discussion of asymmetric information and its impact on decision making is fiscal policy. This note examines a simple...

This paper addresses the issue of portfolio risk exposure as a function of age, and it focuses the debate by presenting detailed cross-sectional evidence about individual portfolios. It provides new empirical results that characterized the relationship between age and the risk exposure of...

This paper explores the relationship between age distribution and asset returns impled by an overlapping-generations asset pricing model. The model predicts that as more individuals reach the age when the increment to their wealth reaches its maximum, asset returns fall. Cross-sectional evidence...

The standard measures of nominal capital formation show the United States investing a proportion of GDP much lower than those of other developed countries throughout the last 2 years and falling further behind over time. In contrast, measures we have calculated in real terms across and over time...

This paper explores the possibility that economic fluctuations may be largely demand-driven. It is shown that the stylized open-economy business cycle regularities documented by Feldstein and Horioka (1980) and Backus, Kehoe and Kydland (1992) can be explained by demand shocks alone even in a...

The profession has been longing for closed-form solutions to consumption functions under uncertainty and borrowing constraints. This paper proposes an analytical approach to solving buffer-stock saving models with both idiosyncratic and aggregate uncertainties. It is shown analytically that an...

A speech at the CFA Society of Nebraska, Omaha, Neb., Feb. 15, 2007

Empirical evidence suggests that fast-growing economies tend to have not only high saving rates but also low interest rates. This evidence is difficult to reconcile with standard explanations about the positive linkages between saving and growth. These explanations rely either on high saving to...

A speech at the CFA Society of Nebraska, Omaha, Neb., Feb. 15, 2007