Targeting of broadly based monetary aggregates, such as M2, continues to play an important role in U.S. monetary policy. Yet the average reserve requirement on M2 assets has fallen dramatically in recent years, a trend which may hamper the ability of the central bank to control such large...

This manuscript reviews the evolving literature on the pricing of assets and the structure of financial markets. It begins with the development of early stock valuation models and proceeds to a description of the efficient-market hypothesis. The survey then examines recent empirical data that...

Despite increasing criticism by economists and forecasters of the ability of the stock market to predict economic recessions, it is shown that 38 of the 41 measured recessions since 1802 have been preceded by an eight percent decline in the stock returns index. There have been twelve "false...

No economic event on or about October 19, 1987 can explain the record collapse of equity prices that occurred on that day. In the summer of 1987 equity valuations were at a historically high levels based on current and projected earnings and the real interest rates available in the bond market.<p>...</p>

Spurred by the work of Mehra and Prescott (M-P), economists have been attempting to explain the surprisingly low levels of real interest rates in light of the behavior of aggregate consumption. This paper constructs a continuous "risk-free" interest rate series for the United States and the...