Journal of Money, Credit & Banking

Reports major findings in the study of financial institutions, financial markets, monetary and fiscal policy, credit markets, money and banking.

Articles from Vol. 29, No. 3, August

Central Bank Independence, Inflation, and Growth in Transition Economies
This paper documents two empirical relationships that have emerged as the former communist countries have taken steps to transform their economies. First, data from a sample of twelve transitions economies suggest that increased central bank independence...
Diversification, Size, and Risk at Bank Holding Companies
This paper shows that large bank holding companies (BHCs) are better diversified than small BHCs based on market measures of diversification. We find, however, that better diversification does not translate into reductions in risk. The risk-reducing...
Do Mergers Improve the X-Efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s
A central issue currently debated among bank analysts and economists is whether mergers enhance the efficiency of surviving banks. This paper investigates the postmerger performance of acquiring banks that participated in a merger during the period...
Do Noise Traders Influence Stock Prices?
This paper tests a smart money-noise trader model directly by comparing its prediction with the behavior of actual investors. It assumes that individual probability of being a noise trader is diminishing in income: high-income households...
Explaining the Failures of the Term Spread Models of the Rational Expectations Hypothesis of the Term Structure
Contrary to the predictions of the rational expectations hypothesis of the term structure of interest rates, empirical evidence suggests that the term spread between long and short rates fails to forecast future movements of long-term...
Pricing Mortgage Default and Foreclosure Delay
This paper extends current mortgage-pricing models to recognize the impact that delays between default and foreclosure have on the value of default to the borrower and the resulting value of the mortgage to investors. TV model explicitly captures...
Should Central Banks Target CPI Futures?
I consider recent proposals that the government should attempt to stabilize the nominal value of a CPI futures contract. Under a variety of conditions arbitrageurs will break the peg and bankrupt the central bank, the central bank ends up in a gaming...
State-Contingent Inflation Contracts and Unemployment Persistence
This paper shows that if unemployment (or some other real variable) follows a dynamic autoregressive process, the government can still achieve its precommitment outcome in monetary policy, by offering the central banker a linear inflation contract,...
The Effects of Military Spending on Economic Activity: Evidence from State Procurement Spending
We use state data from the period 1963-1994 to estimate the response of employment growth to military procurement spending. The state-year panel provides greater variation in both variables than aggregate data. There we two main findings. First military...
The (Un)importance of Forward-Looking Behavior in Price Specifications
The seminal work of Phelps, Taylor, and Calvo developed forward-looking models of price determination that imparted inertia to the price level. These models incorporate expectations of future prices and excess demand by imposing constraints (typically...