Current debate on monetary and fiscal policies is much concerned with the effects of such policies, and of changes in the budget and money supply. I propose here to discuss some taxonomic problems related to the concept of policy effects. Their resolution bears directly upon the controversy between Keynesians and Monetarists. I shall show that it is largely a sham-dispute, and it will appear that the empirical findings of the Monetarists have little relation to the Keynesian creed. Even negative effects of the budget with strong positive effects of money supply are fully consistent with strong positive effects of fiscal action and weak or strong effects of monetary action. The examination of the concept of effects of economic policy will be undertaken in relation to a model that is specified so as to include both the conventional Keynesian set-up for determining effective demand, and a credit mechanism that links effective demand to the banking system in the spirit of the Monetarists

asks it in a new context. The old question is a paraphrase of the title of Herbert Spencer's famous essay What Knowledge is of Most Worth? The new context is to pose the question for undergraduate students majoring in economics. My intent is to engage you in reflecting about what kinds of knowledge and skills our economics majors should master-what proficiencies they should be able to demonstrate-by the time they graduate from college. My focus is on not the select few who plan to enter graduate economics programs, but rather the vast majority who go out into the world and will become the next generation of leaders. I propose a list of knowledge and skills, perhaps a better word is proficiencies, that we might reasonably expect our majors to demonstrate upon graduation. This is by no means a final or definitive list; rather it is offered to stimulate discussion about the meaning of the economics major and how to give it more meaning.

There now exists a host of results concerning the revenue performance of various auction methods. This note delves deeper into auction markets by examining the effects on sellers' revenue of certain noncash means of payment. The basic result-that bidding mediums which include some contingent pricing feature generally yield the seller more revenue than do cash bids-is intriguing by itself and also points out the limitations of received theory. Since what follows builds on the independent-preferences framework, it is useful to first note the assumptions of that model and the major results pertaining to it. To model an auction in the independent-preferences tradition, one assumes that bidders have reservation values, Vi, that are known only privately and that can be depicted as being drawn independently from some distribution F( V). The most important result for this model is the revenue equivalence theorem: as given in John Riley and William Samuelson (1981), any auction involving risk-neutral bidders for which the following four conditions hold: (a) a buyer can make any bid above some minimum reserve price, (b) the buyer making the highest bid is awarded the object, (c) the auction rules are anonymous, and (d) there is a common equilibrium bidding strategy in which each buyer makes a bid bi, which is a strictly increasing function of his reservation value Vi, yields an expected revenue of

Given the state of affairs in auction theory -there is at least one model, for instance, to support any position one would care to take concerning the revenue of sealed-bid vs. open auctions-it should not come as a surprise that a fair amount of empirical work in auctions is underway. This paper reports the results of some recently completed research. I first discuss papers in which the predictions being tested derive directly from the pure theory of auctions, and then papers in which the predictions arise out of an application of auction theory to a related institution.

This paper examines post-revision return drift, or PRD, following analysts’ revisions of their stock recommendations. PRD refers to the finding that the analysts’ recommendation changes predict future long-term returns in the same direction as the change (i.e., upgrades are followed by positive returns, and downgrades are followed by negative returns). During the high-frequency algorithmic trading period of 2003–2010, average PRD is no longer significantly different from zero. The new findings agree with improved market efficiency after declines in real trading cost inefficiencies. They are consistent with a reduced information production role for analysts in the supercomputer era.

We provide the first direct empirical support for the importance of signalling in monetary policy by testing two key predictions from a novel structural model. First, all policymaker types should become less tough on inflation over time and secondly, types that weigh output more should have a more pronounced shift. Voting data from the Bank of England's Monetary Policy Committee strongly support both predictions. Counterfactual results indicate signalling has a substantial impact on interest rates over the business cycle, and improves the committee designer's welfare. Implications for committee design include allowing regular member turnover and transparency regarding publishing individual votes.

ABSTRACT Asset prices contain information about the probability distribution of future states and the stochastic discounting of those states as used by investors. To better understand the challenge in distinguishing investors' beliefs from risk‐adjusted discounting, we use Perron–Frobenius Theory to isolate a positive martingale component of the stochastic discount factor process. This component recovers a probability measure that absorbs long‐term risk adjustments. When the martingale is not degenerate, surmising that this recovered probability captures investors' beliefs distorts inference about risk‐return tradeoffs. Stochastic discount factors in many structural models of asset prices have empirically relevant martingale components.