In 2008, U.S. regulators banned the short-selling of financial stocks, fearing that the practice was helping to drive the steep drop in stock prices during the crisis. However, a new look at the effects of such restrictions challenges the notion that short sales exacerbate market downturns in...

That central banks should hold foreign currency reserves is a key tenet of the post-Bretton Woods international financial order. But recent growth in the reserve balances of industrialized countries raises questions about what level and composition of reserves are “right” for these...

The growing prominence of stocks as a household asset in the 1990s encouraged the view that the United States had become a nation of zealous investors alert to every market development and eager to acquire new stocks. Yet an analysis of the factors behind the rise in the household equity share...

Since the 1980s, economists have argued that the slope of the yield curve-the spread between long- and short-term interest rates-is a good predictor of future economic activity. While much of the existing research has documented how consistently movements in the curve have signaled past...

Recent high correlations among hedge fund returns could suggest concentrations of risk comparable to those preceding the hedge fund crisis of 1998. A comparison of the current rise in correlations with the elevation before the 1998 event, however, reveals a key difference. The current increase...