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Financial Markets

Financial Markets

Research

Alexander Salter | Dec 04, 2014
In a new study for the Mercatus Center at George Mason University, scholar Alexander William Salter examines several different proposed rules that the Fed could follow. Salter provides a framework to help policymakers better understand how incentives and information can affect monetary policy and discusses discretion-based and rule-based approaches to monetary policy.
Edward Stringham | Dec 2014
Public officials have blamed Wall Street and its complex financial products for causing the 2008 economic downturn. This article addresses three popular claims saying that complex financial markets are at fault and need more regulation.
Christopher Boudreaux | Jun 2014
Income inequality is often attributed to declines in income mobility following the Great Gatsby curve, but this relationship is of secondary importance in determining the factors of income mobility if one considers that changing rules is more important than changing outcomes under defined rules.
Robert Greene, | Apr 02, 2014
For decades, money market funds (MMFs) were thought to be safe, low-risk investments. The financial crisis of 2007–2009 cast MMFs in a new, less favorable light, which prompted calls for reform. Our paper offers a reform alternative that builds on MMF boards of directors and their well-established responsibility for making key decisions for MMFs. After a brief overview of the regulatory history of MMFs, we describe the responsibilities that boards have under current law, the problems MMFs encountered during the crisis, and market and government responses to these problems. Evidence shows that during the crisis, investors were discerning in deciding whether and when to run; more risky, less liquid funds experienced higher volumes of redemptions. This finding, along with our assessment of funds’ boards of directors’ responsibilities, helps to lay the groundwork for considering the various options for addressing problems still facing MMFs, including our proposal to allow boards to gate their funds when faced by potentially destabilizing redemption pressures.
Ian Robinson, Thomas Stratmann, | Feb 27, 2014
This paper presents the results of the Mercatus Center’s Small Bank Survey, which include responses from approximately 200 banks across 41 states with less than $10 billion in assets each, serving mostly rural and small metropolitan markets.
Alexander Salter | Oct 2013
Market Monetarism, with its policy rule of NGDP targeting, has in common with free banking that both seek to avoid monetary disequilibrium. One might conclude that these are different approaches to achieving the same end. The purpose of this paper is to show that the proximate ends are in fact conceived differently: Stable NGDP as an object of choice by a central bank is different from NGDP as the emergent outcome of the market process.

Testimony & Comments

Expert Commentary

Mar 04, 2016

Growth requires the three Ps: Property Rights, Prices, and Profit and Loss to achieve the three Is of Innovation, Information, and Incentives. Too much government activity disturbs the rules of the game and undermines property rights. Entrepreneurs are not certain if their plans will succeed under the rapidly changing rules. The result: Investments are hold back and jobs not created. This is what Dr. Martin and I describe as regime uncertainty and consider it as one the reasons for the sluggish recovery in the United States.
Mar 30, 2015

As the world looks back on Lee's legacy, we should pay special attention to his contributions on responsible and effective governance over a three-decade reign as the city-state's prime minister.
Jan 08, 2015

Few Americans have even heard of the Financial Industry Regulatory Authority (FINRA), but the securities regulator is about to become intimately familiar with all Americans' investment portfolios. FINRA recently proposed the Comprehensive Automated Risk Data System, known by the less scary-sounding shorthand "CARDS." In the name of investor protection and investor confidence, FINRA plans to monitor all securities accounts and transactions. Investors should run from this kind of protection.
Jan 05, 2015

Many people blame the recent financial crisis on a lack of regulation and fraud in the financial system. However, the Federal Reserve appears to have been a significant contributor to the crisis in terms of both its poor monetary policy and faulty regulation of the financial system.
Sep 18, 2013

The Federal Reserve Board today is expected to announce plans to begin tapering its latest round of quantitative easing (QE). The possibility of tapering the QE program has at times created volatility in the stock market, and supporters of the monetary stimulus have argued that QE has not increased inflation.
May 20, 2013

Since the financial meltdown in 2008, the Federal Reserve's range of powers have expanded, as have the kinds of financial institutions it monitors and regulates. Fed Chairman Ben Bernanke is now saying that the Fed's oversight has expanded beyond strictly financial institutions to wide swaths of the economy that might, in his words, provide evidence of "emerging vulnerabilities."

Podcasts

Jerry Ellig | September 17, 2013
The scope and number of regulations continues to grow, but proof that problems are being solved remains elusive. Several reform efforts are focusing on ways to improve economic analysis so that agencies can make better decisions about when and how to use regulation for problem-solving. New research indicates several reforms that could have a positive impact.

Media Clippings

Steven Horwitz | Apr 23, 2012
Steven Horowitz applies the parable of the broken traffic lights to the mortgage lending crisis.
Peter Leeson | Mar 02, 2012
Peter Leeson talks about the rational economic calculations of pirates.
Maurice P. McTigue, Benjamin J. VanMetre | Oct 19, 2011
Maurice McTigue and Benjamin VanMetre wrote an op-ed for The Chicago Tribune on the US Postal Service.
John Pulito, Antony Davies | Aug 19, 2011
Antony Davies and John Pulito's paper on tax migration was featured on Detroit News-Online.
Jacob Feldman | Aug 12, 2011
Jacob Feldman Wrote an article for Big Government on the cost of EPA regulations.