This article examines the reasons for the phenomenal growth of financial derivative markets in recent years. The author shows how specific demand forces have largely determined the direction and speed of the derivatives' spread.

Increased financial globalization, the development of new financial instruments, and changing macroeconomic conditions have led to a renewed examination of liquidity risk. This Economic Letter highlights key elements of liquidity risk measurement and management.

Residential real estate markets often go through "hot" and "cold" periods. A hot market is one where prices are rising, liquidity is good in that average selling times are short, and the volume of transactions is higher than the norm. Cold markets have just the opposite characteristics - prices...

An "easing" of monetary policy can be characterized by an expansion of bank reserves and a persistent decline in the federal funds rate that, with a considerable lag, induces a pickup in employment, output, and prices. This article presents empirical evidence consistent with this depiction of...

Money demand models overpredicted M2 growth in the United States from 1990 to 1993. We examine this overprediction using a model of household demand for liquid wealth. The model is a dynamic generalization of the almost-ideal demand model of Deaton and Muellbauer (1980). We find that the...