Currency markets have witnessed a sharp increase in government intervention since 1985. Many observers believe that this intervention promoted the dollar's depreciation between 1985 and early 1987, and that intervention has since helped to stabilize dollar exchange rates. This paper tests for a...

An analysis of the corporate investment decision when financial structure has real effects, utilizing data for the U.S. manufacturing sector from 1954 to 1980.

Germany, Japan, and the United States continue to view foreign exchange intervention as an effective instrument, although the mechanism through which it operates is unclear. In this paper, we use official data on daily dollar intervention to examine its impact on exchange-rate risk premia...

Evidence that forward rates for foreign exchange are not unbiased forecasts of future spot rates suggests a time-varying risk premium. However, there is little evidence that the forecast error is related to fundamentals, although most investigations have lacked high-frequency data. In this...

An examination of the short- and long-run effects of inflation on financial markets and investment.

An assessment of how banks adjust to increased capital requirements, illustrated by a model of a bank's choice of optimal leverage.