One of the most significant changes in monetary economics in recent years has been the virtual disappearance of what was once a dominant focus on money, and in parallel the disappearance of the LM curve as part of the analytical framework that economists use to think about issues of monetary...

For expectations of price inflation to affect interest rates, they must affect the behavior of borrowers and lenders or both. This paper analyzes the emergence of the inflation premium in long-term interest rates as the explicit result of borrowers' and lenders' behavior in the bond market in...

How the financing of government budget deficits affects the structure of expected asset returns depends on assets' relative substitutabilities in investors' aggregate portfolio, and these substitutabilities in turn depend on how investors perceive the risks associated with the respective assets'...

The maturity structure of the U.S. government's outstanding debt has undergone large changes over time, at least in part because of shifts in the Treasury's debt management policy. During most of the post World War I1 period, an emphasis on short-term issues rapidly reduced the debt's average...

An earlier paper by the author investigated the quantitative implications, for the effectiveness of fiscal and monetary policies, of a model treating the determination of long-term interest rates by explicitly imposing the market clearing equilibrium condition that the quantity of bonds issued...

Institutional investors, including especially pension funds and mutual funds, are steadily replacing individuals as owners of equity shares in the United States. Forty years ago individual investors owned 90% of all equity shares outstanding. Today the individually owned share is just 50%. The...

This paper documents a long-standing stability in the relationship between outstanding debt and economic activity in the United States, and explores the implications for capital formation of several hypotheses that could explain this observed phenomenon. The aggregate of outstanding credit...

Empirical results based on two different statistical approaches lead to several conclusions about the role of time-varying asset risk assessments in accounting for what, on the basis of many earlier studies, appear to be time-varying differentials in ex ante asset returns. First, both methods...

This paper investigates empirically the degree of substitutability between debt and equity securities in the United States during 1960-1980. The analysis first applies fundamental relationships connecting portfolio choices with expected asset returns to infer key asset substitutabilities...

The U.S. economy's nonfinancial debt ratio has risen since 1980 to a level that is extraordinary in comparison with prior historical experience. Approximately one-half of this rise has consisted of increased indebtedness (relative to income) of borrowers in the economy's private sector,...