In response to the Financial Crisis of 2008, macroeconomic policymakers employed a range of tools designed to prevent failures of large, complex financial institutions ("banks"). The Treasury and the Fed justified these actions by arguing that bank failures exacerbate output declines, rather...

The effect of drug prohibition on drug consumption is a critical issue in debates over drug policy. One episode that provides information on the consumption-reducing effect of drug prohibition is the Chinese legalization of opium in 1858. In this paper we examine the impact of China's opium...

The paper derives a new monthly index of industrial production for the United States for 1884-1940. This index improves upon existing measures of industrial production by excluding indirect proxies of industrial activity, by only using component series that are consistent over time, and by not...

Among the many unresolved questions regarding the determinants of violence is the role of prohibitions against drugs and alcohol. Conventional wisdom holds that consumption of these goods encourages violence and that prohibitions discourage such consumption; thus, prohibitions reduce violence....

We estimate the consumption of alcohol during Prohibition using mortality, mental health and crime statistics. We find that alcohol consumption fell sharply at the beginning of Prohibition, to approximately 30 percent of its pre-Prohibition level. During the next several years, however, alcohol...

A standard assumption in the literature on optimal monetary policy is that the proper goal of policy is the reduction of the variation in output around its natural rate level. The stabilization of output has not always been accepted as the primary goal of policy, however. This paper argues that...

We reexamine the expectations theory of the term structure using data at the short end of the maturity spectrum. We find that prior to the founding ofthe Federal Reserve System in 1915, the spread between long rates and short rates has substantial predictive power for the path of interest rates;...

This paper attempts to explain the differences in inflation performance across countries. Earlier research has examined this topic, but it has considered only some of the factors that might be empirically important determinants of inflation rates. We consider the distaste for inflation, optimal...

This paper examines the effect of drug prohibition on the black market prices of cocaine and heroin. The paper examines the ratio of retail to farmgate price for cocaine, heroin, and several legal goods, and it compares legal versus black market prices for cocaine and heroin. The results suggest...

We examine two measures of monthly manufacturing production. The first is the index of industrial production; the second is constructed from the accounting identity that output equals sales plus the change in inventories. We show that the means, variances, and serial correlation coefficients of...