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The `Asian Crisisa of 1997}98 a!ected all the `emerging marketsa open to capital #ows. Measures of corporate governance, particularly the e!ectiveness of protection for minority shareholders, explain the extent of exchange rate depreciation and stock market decline better than do standard macroeconomic measures. A possible explanation is that in countries with weak corporate governance, worse economic prospects result in more expropriation by managers and thus a larger fall in asset prices. � 2000 Elsevier Science S.A. All rights reserved. JEL classixcation: G18; G38; K22

We examine empirically how the maturity structure of government debt affects bond yields and excess returns. Our analysis is based on a theoretical model of preferred habitat in which clienteles with strong preferences for specific maturities trade with arbitrageurs. Consistent with the model, we find that (i) the supply of long- relative to short-term bonds is positively related to the term spread, (ii) supply predicts positively long-term bonds ’ excess returns even after controlling for the term spread and the Cochrane-Piazzesi factor, (iii) the effects of supply are stronger for longer maturities, and (iv) following periods when arbitrageurs have lost money, both supply and the term spread are stronger predictors of excess returns.

The Federal Reserve is not formally inflation targeting. Nevertheless, it is commonly believed to be an implicit inflation targeter. The evolution to inflation targeting occurred because central banks, most importantly the Federal Reserve, demonstrated that monetary policy could control inflation. As central banks ’ credibility for keeping inflation low increased, policy actions became increasingly focused on affecting the growth rate of employment or the unemployment rate. The author argues that this change in emphasis is unlikely to generate positive benefits; more importantly, it endangers the continued effectiveness, and perhaps even the viability, of inflation targeting. (JEL E31, E52, E58) Federal Reserve Bank of St. Louis Review, January/February 2012, 94(1), pp. 65-81.

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Intel, Microsoft, and the U.S. Department of Defense. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation. Migration to Open-Standard Interorganizational Systems: Network Effects, Switching Costs, and Path Dependency This study examines firms ’ migration across interorganizational systems (IOS) that are built on standards with relatively different degrees of openness. As firms seek to improve inter-firm coordination using network technologies, open standards are becoming increasingly important. To better understand the process of standards diffusion, we investigate the migration from relatively less open IOS (i.e., electronic data interchange or EDI) to open-standard IOS (i.e., the Internet). Viewing the decision to adopt openstandard IOS in economic terms (benefits vs. costs), we develop a conceptual model of open-standard IOS adoption that features network effects, expected benefits, and adoption costs as prominent antecedents. Theoretical work in economics suggests that network effects are a determinant of network adoption, yet the extant literature falls short of empirical testing of the theory. We examine our conceptual

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This paper focuses on a topic which is still rather controversial, namely the implications of the NE for macroeconomic stability. This topic seems to be even more relevant now that the NE has completed its parable from boom to depression. While most authors agree that the term `NE' captures the important shift in the US economy that took place in the 1990s, opinions differ about the nature of this shift. In particular, in the literature opinions oscillate between the two poles of euphoria and scepticism. The NE is regarded either as the onset of a Golden Age where the business cycle disappears (e.g. Weber 1997, Kelly 1997) or as a shift having only a limited impact on the working of the system as a whole (e.g. Blanchard and Simon 2001, De Long 1999: 19-20; Baily 2002: 18). This paper holds instead that the NE has more complex macroeconomic implications. It is not just synonymous of improvement in economic performance, but also brings about new dangers for global stability. It can be argued that key NE features, such as globalisation and Information Technology (IT), are two-edged swords: they tend to have dual effects, both positive and negative ones

Abstract: It is now widely recognized that the interest rate risks embedded in the Fannie Mae and Freddie Mac (F&F) retained mortgage portfolios create a serious threat to the US financial system. This paper evaluates proposals to control the interest rate risk embedded in these portfolios. The analysis focuses on the current proposal to limit the size of the F&F retained portfolios, but also considers alternative means to control this interest rate risk. The analysis takes into account (1) what fund sources would replace F&F as mortgage investors, (2) where will the interest rate risk reside after it is removed from the F&F portfolios, and (3) what is the likely impact of the change on US mortgage interest rates. The conclusion is to endorse several solutions, including size limitations on the F&F retained portfolios, each of which would reduce or eliminate the F&F interest rate risk that currently threatens the US financial system. About the Author: Dwight M. Jaffee is the Booth Professor of Finance and

The first part of this paper examines the theoretical and empirical case for full capital account liberalisation in developing countries(DCs) and finds it unconvincing. Indeed, analysis and evidence presented here point to a compelling case against it. The second part considers the liberalisation of only the long-term capital account, particularly FDI- a form of in-flow favoured by most economists. This paper, however, argues that even FDI, if unregulated, may do more harm than good. It is suggested that DCs should, therefore, resist the new advanced country proposals for a multilateral agreement on FDI.