Monetary policy and asset prices: a look back at past U.S. stock market booms

This article examines the economic environments in which past U.S. stock market booms occurred as a first step toward understanding how asset price booms come about and whether monetary policy should be used to defuse booms. The authors identify several episodes of sustained rapid rises in equity prices in the 19th and 20th centuries, and then assess the growth of real output, productivity, the price level, and money and credit stocks during each episode. Two booms stand out in terms of their length and rate of increase in market prices—the booms of 1923-29 and 1994-2000. In general, the authors find that booms occurred in periods of rapid real growth and productivity advancement, suggesting that booms are driven at least partly by fundamentals. They find no consistent relationship between inflation and stock market booms, though booms have typically occurred when money and credit growth were above average.Monetary policy ; Asset pricing

Monetary Policy and Asset Prices: A Look Back at Past U.S. Stock Market Booms

This paper examines the economic environments in which past U.S. stock market booms occurred as a first step toward understanding how asset price booms come about and whether monetary policy should be used to defuse booms. We identify several episodes of sustained rapid rise in equity prices in the 19th and 20th Centuries, and then assess the growth of real output, productivity, the price level, money and credit stocks during each episode. Two booms stand out in terms of their length and rate of increase in market prices -- the booms of 1923-29 and 1994-2000. In general, we find that booms occurred in periods of rapid real growth and productivity advance, suggesting that booms are driven at least partly by fundamentals. We find no consistent relationship between inflation and stock market booms, though booms have typically occurred when money and credit growth were above average.

Stock market booms and monetary policy in the twentieth century

This article examines the association between stock market booms and monetary policy in the United States and nine other developed countries during the 20th century. The authors find, as was true of the U.S. stock market boom of 1994-2000, that booms typically arose during periods of above-average growth of real output and below-average inflation, suggesting that booms reflected both real macroeconomic phenomena and monetary policy. They find little evidence that booms were fueled by excessive liquidity. Booms often ended within a few months of an increase in inflation and consequent monetary policy tightening. They find few differences across the different monetary policy regimes of the century.Stock market ; Monetary policy

When do stock market booms occur? the macroeconomic and policy environments of 20th century booms

This paper studies the macroeconomic conditions and policy environments under which stock market booms occurred among ten developed countries during the 20th Century. We find that booms tended to occur during periods of above-average growth of real output, and below-average and falling inflation. We also find that booms often ended within a few months of an increase in inflation and monetary policy tightening. The evidence suggests that booms reflect both real macroeconomic phenomena and monetary policy, as well as the extant regulatory environment.Monetary policy ; Stock exchanges

Price stability and financial stability: the historical record

Although the economic performance of the U.S. economy in 1997 was very good, it was troubling in at least one respect for the Federal Open Market Committee. Traditional signals of inflation - rapid money growth and high levels of economic activity - were not accompanied by higher inflation. Rather, inflation fell steadily throughout the year. The committee put forth several hypotheses for the subdued inflation but found the situation puzzling, nevertheless. Compounding the problem, members did not know how long such dampening factors might last. In the end the FOMC changed the intended federal funds target once and searched anxiously for the answers to the conundrum it faced in 1997.Economic policy

Food Programs, Family Demographics and Food Security of Children

Replaced with revised version of paper 01/27/06.Food Security and Poverty,

High-density diffuse optical tomography for imaging human brain function

This review describes the unique opportunities and challenges for noninvasive optical mapping of human brain function. Diffuse optical methods offer safe, portable, and radiation free alternatives to traditional technologies like positron emission tomography or functional magnetic resonance imaging (fMRI). Recent developments in high-density diffuse optical tomography (HD-DOT) have demonstrated capabilities for mapping human cortical brain function over an extended field of view with image quality approaching that of fMRI. In this review, we cover fundamental principles of the diffusion of near infrared light in biological tissue. We discuss the challenges involved in the HD-DOT system design and implementation that must be overcome to acquire the signal-to-noise necessary to measure and locate brain function at the depth of the cortex. We discuss strategies for validation of the sensitivity, specificity, and reliability of HD-DOT acquired maps of cortical brain function. We then provide a brief overview of some clinical applications of HD-DOT. Though diffuse optical measurements of neurophysiology have existed for several decades, tremendous opportunity remains to advance optical imaging of brain function to address a crucial niche in basic and clinical neuroscience: that of bedside and minimally constrained high fidelity imaging of brain function

Environmental Sodium as a Factor in the Behavior and Distribution of African Elephants

African elephants ingest substances which are rich in sodium. High sodium levels in available water also attract elephants. Overall distribution of elephants is controlled primarily by game park managers. It is suggested that manipulation of the sodium variable may be a useful tool in development of more efficient management schema

Aggregate Price Shocks and Financial Stability: The United Kingdom 1796-1999

This paper investigates the impact historically of aggregate price shocks on financial stability in the United Kingdom. We construct an annual index of U.K. financial conditions for 1790-1999 and use a dynamic probit model to estimate the effect of aggregate price shocks on the index. We find that price level shocks contributed significantly to financial instability during 1820-1931, and that inflation rate shocks contributed to instability during 1972-99. Both the nature of aggregate price shocks and their impact depend on the existing monetary and financial regime, but price shocks historically have been a source of financial instability.

Aggregate price shocks and financial stability: the United Kingdom 1796-1999

This paper investigates the impact historically of aggregate price shocks on financial stability in the United Kingdom. We construct an annual index of U.K. financial conditions for 1790-1999 and use a dynamic probit model to estimate the effect of aggregate price shocks on the index. We find that price level shocks contributed significantly to financial instability during 1820-1931, and that inflation rate shocks contributed to instability during 1972-99. Both the nature of aggregate price shocks and their impact depend on the existing monetary and financial regime, but price shocks historically have been a source of financial instability.>Economic policy ; Inflation (Finance) ; Prices