Equity prices have been falling since March 2000. How far can they fall before they reach bottom? The current bear market differs from the mid-1970s plunge in equity prices in terms of the causes and, consequently, the factors that should be monitored to test its progress. In the 1970s, the bear...

The anemic U.S. economic recovery and the threat of a double-dip recession stem from the weakness of investment, due to excess capacity created in the euphoric years of the "new economy" bubble. The current imbalances in the corporate sector (i.e., the all-time-high indebtedness in the face of...

The consumer has been on a tightrope since the bursting of the "new economy" bubble, as losses in equity markets have been partly offset by gains in real estate and fiscal support and mortgage refinancing have partly offset increased consumer cautiousness. The consumer will remain on a tightrope...

A continuation of the current policy of bond purchases known as quantitative easing is highly probable under Janet Yellen, who is likely to be confirmed as the successor to Federal Reserve chair Ben Bernanke. The authors assess the probable outcomes for interest rates, which they think will not...

This contribution discusses the origins of the Great Recession and also offers suggestions for possible cures. The focus in explaining the origins of the crisis is on two features: the experience in the us with financial liberalisation is most telling in terms of the cause of the current crisis....

Beginning with an assessment of new thinking in macroeconomics and monetary theory, this book suggests that many countries have adopted the New Consensus Monetary Policy since the early 1990s in an attempt to reduce inflation to low levels. It goes on to illustrate that the explicit control of...

Central banks have an aversion to bailing out speculators when asset bubbles burst, but ultimately, as custodians of the financial system, they have to do exactly that. Their actions are justified by the goal of protecting the economy from the bursting of bubbles; while their intention may be...

This paper attempts to quantify the U.S. housing market slump and its likely impact on consumption. In doing so, it bypasses the traditional approach that suggests that there is no nationwide housing market but a compendium of segmented markets. The paper is not an exercise in forecasting but an...

The three puzzles these authors address suggest that managing the world economy may become more difficult in the coming year. Low bond yields, the good performance of euro stocks, and the broadening of retail investors into nontraditional assets have raised more questions than answers. These...

The aim of this paper is to show that there are clear advantages in forecasting overall market trends and in policy analysis in treating the US housing market as homogeneous. This study differs from the traditional approach and other studies that attempt to deal with US house prices in a...