Does increased savings result in a "paradox" or not? In this paper, a simple model highlights the assumptions sufficient to make thrift a paradox. It also shows what assumptions are necessary to make thrift a virtue

We outline how to use historical analogies or macroeconomic models to generate inputs for mean-variance optimizations. Additionally, we present an alternative framework for thinking about "efficient" portfolios. Our framework focuses on selecting from amongst return distributions instead of...

The market crisis of 2007 and 2008 shattered many investors' notions of the efficiency and stability of markets. It also likely shattered a lot of investors' confidence in asset allocation schemes. Some advisors thought they were following sound strategies, only to have severely adverse results....

This paper describes the history of sovereign debt crises and the ways in which sovereign debt crises can spread like a virus from country to country and from the sovereign sector to other sectors of the economy. This latter propagation often has been ignored in the academic literature, though...

One of the great mysteries of finance is "what determines an interest rate?" The most basic framework is a supply and demand framework for loanable funds. Those who supply (i.e., save) have their reasons while those who demand (i.e., those who borrow) have their reasons. In this brief note we...

When the Federal Reserve conducts open market operations, it does so through the Federal Reserve Bank of New York and a network of primary dealers. When the Fed buys assets from primary dealers, it credits the accounts of the dealers at the custodial banks. The custodial banks now have excess...

Sovereign debt crises do not need to be viral. Whether they are depends on the government's interaction with the private sector. The more open an economy, the less likely it is that a sovereign debt crisis will infect the domestic private sector. More importantly, the larger the government's...