When faced with a liquidity trap, a "traditional" open market purchase will generally be ineffective. Theoretical studies have suggested that intervention in other markets could offer a means of escaping from this trap. We provide some empirical evidence on the importance of non-traditional open...

Although it has been well established that financial volatility is related to news and macroeconomic shocks, there has been less emphasis on the importance of underlying economic and political stability. In this paper we study the behavior of consol returns since 1729 and identify a...

We use the founding of the Federal Reserve as a historical experiment to provide some insight into whether a lender of last resort can stabilize financial markets. Following the Panic of 1907, Congress passed two measures that established a lender of last resort in the United States: (1) the...