Financial economists have long debated whether monetary policy is neutral. This paper addresses this question by examining how stock return data respond to monetary policy shocks. Monetary policy is measured by innovations in the federal funds rate and nonborrowed reserves, by narrative...

Financial derivatives have harmed or destroyed numerous financial firms, nonfinancial firms, and municipalities in 1994 and 1995. This paper discusses the dangers of derivatives and also their benefits. It then considers policies that will maintain the benefits while containing the risks. These...

We use a multi-factor asset pricing model to investigate whether fluctuations in industry stock returns are due to industry stock returns are due to industry-specific shocks or to monetary and other macroeconomic factors. We find that common factors explain a substantial portion of the variation...