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A N O T H E R L O O K AT T H E E V ID E N C E O N M O N E Y -IN C O M E C A U S A L IT Y Benjamin M. Friedman and Kenneth N. Kuttner Working Paper Series Macro Economic Issues Research Department Federal Reserve Bank of Chicago October, 1990 (WP-90-17) Another Look at the Evidence on Money-Income Causality Benjamin M. Friedman and Kenneth N. Kuttner* Whether fluctuations in the stock of money anticipate fluctuations in income is an important question, with implications for both economic theory and economic policy. In a widely cited pdper, James Stock and Mark Watson (1989) offered new evidence for the United States showing that money, as measured by the nar row Ml aggregate, does have statistically significant marginal predictive value for real income, as measured by industrial production. Wholly apart from the use ful methodological contribution represented by the new testing strategy that they proposed in their paper, Stock and Watson’s empirical findings were especially noteworthy for two reasons: First, in contrast to the popular impression that fa miliar money-income relationships (and, for that matter, money-price relationships too) had broken down in the 1980s, their results showed a continuing significant relationship in a sample extending through 1985. Second, in contrast to earlier researchers (most prominently, Christopher Sims) who had found a significant re lationship between money and real income in a bivariate context but not after also allowing for fluctuations in interest rates, Stock and Watson’s results showed that money had significant marginal predictive value for income even in the presence of a short-term interest rate. Evidence presented below shows, however, that Stock and Watson’s findings are not robust in two ways, corresponding in turn to each of these aspects of their re sults that made them so interesting in the first place: First, merely extending the sample period through 1988 renders money no longer significant in predicting in come, even within their chosen specification. Hence the widespread impression that the money-income relationship has weakened, if not collapsed altogether, is closer to the truth. Second, even for data through 1985 only, the Stock-Watson finding turns out to depend on the use in the analysis of a particular interest rate, the Treasury bill rate. Using instead the commercial paper rate, another short-term interest rate which apparently is superior in capturing the information in finan cial prices that matters for the determination of real income, sharply weakens the Stock-Watson result. * Harvard University and The Federal Reserve Bank of Chicago, respectively. The authors are grate ful for research support from the National Science Foundation, the General Electric Foundation and the Harvard Program for Financial Research. The views presented here are the authors’; they do not necessarily reflect the official position of the Federal Reserve Bank of Chicago. FRB CHICAGO Working Paper October 1990, WP-1990-17 I Applying the Stock-Watson Test to Different Samples Following Sims (1980) and other researchers, Stock and Watson conducted their investigation of the money-income relationship in the context of a four-variable monthly vector autoregression system including not only money and real income (proxied by industrial production) but also prices and a short-term interest rate.1 On the basis of a careful analysis of the univariate trend properties of these series, in conjunction with the absence of evidence of co-integration among these four variables, they selected as their preferred specification the first-differenced form 6 Ay, = a + 12 P, Am,-i + i=1 12 y, Ay,_( + i=l 12 8, A/> ,■+ ,_ i'=l 9, A +/(0 + u, r,_,- (1) i=l where the regressors are as listed above,/(0 is a polynomial function of time, and u is a standard disturbance term. Stock and Watson argued for the inclusion of thef(t) regressor in (1) on the basis of their finding that nominal money growth is well described as stationary about a small but statistically significant trend term. Including/(r) in the regression is equivalent to detrending each variable individually. Hence with the trend included, the standard causality tests for the significance of lagged money focus on the pre dictive power of detrended money growth. Stock and Watson estimated each of their causality-test equations in three forms: with no time trend, including a linear trend, and including both linear and quadratic trends. At the methodological level, the careful treatment of time trends and their implications is a major contribution of the Stock-Watson paper. Finally, while the choice of lag length 12 is standard in much of the vector autore gression literature based on monthly data, Stock and Watson estimated one version of (1) including the standard 12 lags on all variables and another, as written above, with only 6 lags on money and 12 lags on the other variables. They found that the F-statistic for the joint significance of the coefficients on money falls off sharply when the full 12 lags are included. Hence the use of lag length 6 for money, in the results presented here, actually favors the conclusion that money has significant marginal predictive power for income. Table 1 presents sets of F-statistics, corresponding to three different sample peri ods, for the null hypothesis that all of the ft coefficients — that is, all of the coef ficient values on lagged values of money — are zero in (1). Following Stock and Watson, for each sample period there are three variants of the equation, differing only according to the time trends included. In addition, each of the four variables FRB CHICAGO Working Paper October 1990, WP-1990-17 2 Table 1 F-Statistics for Effect of Money in Stock-Watson Tests 1960:2-1985:12 Sample: 1960:2-1979:9 1960:2-1988:12 None 2.187 (0.045) 2.493 (0.024) 1.084 (0.372) Linear 2.774 (0.012) 1.427 (0.206) 1.356 (0.232) Linear, Quadratic 2.181 (0.045) 1.339 (0.241) 1.019 (0.413) Trends Included Note: Numbers in parentheses are marginal significance levels. in the equation is defined throughout as in Stock and Watson’s analysis: the in dex of industrial production (seasonally adjusted, 1987 = 100), Ml (seasonally adjusted), the producer price index for all commodities (not seasonally adjusted, 1982 = 100), and the secondary market rate on three-month Treasury bills (not seasonally adjusted). The results shown in the first column of the table closely replicate Stock and Wat son’s findings for their 1960:2-1985:12 sample.2 Money has significant marginal predictive value for income for all three renderings of/(/), and especially so for the linear-trend case. Analogous results shown in the second column are for data spanning 1960:2-1979:9 — that is, until just before the Federal Reserve System’s adoption of new monetary policy procedures in October 1979. Stock and Watson, who in their paper paid careful attention to questions of sub-sample stability, also presented results for this sample, and the values shown in Table 1 again closely replicate theirs.3 The point of including results for this sub-sample here is sim ply to highlight the sample-specific nature of Stock and Watson’s findings about the role of time trends. Given the comparison between the first two columns of the table, it is hardly surprising that the pre-1980s literature on the money-income relationship did not emphasize inclusion of trends. The third column of Table 1 shows analogous F-statistics based on data through 1988. Merely extending the sample for an additional three years into the 1980s renders money not marginally significant in predicting real income, at any plausi ble significance level, regardless of whether the Stock-Watson trend terms are in cluded. Moreover, results (not shown) for the 1960:2-1988:12 sample but based FRB CHICAGO Working Paper October 1990, WP-1990-17 3 on other specifications that Stock and Watson proposed reconfirm these results more broadly. Nor is the F-statistic for money significant in analogously specified equations for prices, or for nominal income (proxied by the product of the producer price index and the index of industrial production). Whatever these relationships may have been before 1980, they have apparently deteriorated to such an extent that they no longer appear in samples that include the 1980s. The Treasury Bill Rate versus the Commerical Paper Rate Following the work of Sims (1980), it has become customary in tests for effects of money on real income to control for the effect of interest rates. A typical finding in such work is that whether money has significant marginal predictive value for income is highly sensitive to whether the analysis includes an interest rate. One especially interesting feature of Stock and Watson’s findings, therefore, was the limited nature of this sensitivity that they reported. True, deleting the interest rate from their preferred specification for 1960:2-1985:12 raised the F-statistic for the coefficients on lagged money from 3.04 to 3.50. But the more important point, as emphasized above, is that even the smaller value, for the system including the interest rate, was highly significant. Although the inclusion of a short-term interest rate in empirical work of this kind is now standard enough, there has been little discussion in the literature of just which short-term rate is appropriate. Sims (1980) and Friedman (1983) both used the commercial paper rate, while Litterman and Weiss (1985), Eichenbaum and Singleton (1986) and Stock and Watson (1989) all used the Treasury bill rate.4 None of these authors, however, offered substantive arguments in support of the selection made. Just as different monetary aggregates correspond to different conceptual ways of measuring financial market quantity information, different interest rates cor respond to different conceptual ways of measuring financial market price infor mation. As Friedman and Kuttner (1990) explained in some detail, in the case of the commercial paper rate — that is, the interest rate on short-term unsecured bor rowing by corporations in nonfinancial lines of business — and the Treasury bill rate — that is, the analogous unsecured borrowing rate for the U.S. Government — there are substantive grounds on which to question which one provides the bet ter gauge of the financial prices that matter for the determination of real economic activity. For purposes of this paper, however, what is of interest is the empirical implication, for Stock and Watson’s results, of using one of these rates versus the other. Table 2 presents evidence that the use of one of these two short-term interest rates versus the other has an important bearing on the Stock-Watson findings about the FRB CHICAGO Working Paper October 1990, WP-1990-17 marginal predictive value of money for real income. The table shows F-statistics for tests of the null hypothesis that all of the coefficients on money are zero, and also for (separate) tests of the null hypothesis that all of the coefficients on the interest rate are zero in (1) estimated for the 1960:2-1985:12 sample. The table shows results based on using the three month Treasury bill rate as the model’s short-term interest rate, as in Stock and Watson’s work, and alternative results based on using the rate on six-month dealer-placed prime commercial paper (also not seasonally adjusted). Although the F-statistics for the effect of the interest rate on income are uniformly larger for the commercial paper rate than for the Treasury bill rate, in no case does the change render this effect significant at any plausible level. By contrast, which short-term interest rate the model includes does affect the significance of the effect of money on income. In no case is the effect of money significant even at the .10 level in the presence of the commercial paper rate. Hence even within their own 1960-85 sample, Stock and Watson’s strongly pos itive findings hinge crucially on the use of the Treasury bill rate rather than the commercial paper rate to represent financial market price information. Not sur prisingly, as Table 3 shows, simultaneously extending the sample and substituting the commercial paper rate for the Treasury bill rate overwhelms Stock and Wat son’s positive results altogether. Although it may be tempting to interpret these results as a straightforward indi cation that the commercial paper rate is simply superior to the Treasury bill rate in capturing information about financial effects on nonfinancial economic activ ity, further investigation shows that the relevant interactions may in fact be more subtle. Table 4 presents F-statistics for several tests of an expanded version of (1) in which the Treasury bill rate is replaced by both the commercial paper rate and the spread between the commercial paper rate and the Treasury bill rate. The table shows results for both the 1960-85 and the 1960-88 sample periods, but only for Stock and Watson’s preferred specification including the linear time trend. (Cor responding results for the variants with no trend and with both linear and quadratic trends are highly similar.) Neither the F-statistic testing the effect of money nor that testing the effect of the commercial paper rate is significant, at any plausible level, in either sample. By contrast, what is startling is that the paper-bill spread is significant at the .0001 level or better in both sample periods. At the same time, the F-statistic for the (sep arate) null hypothesis that the respective pairs of coefficients on the commercial paper rate and the paper-bill spread are each equal in magnitude and opposite in sign (so that the net result is equivalent to simply including the Treasury bill rate, FRB CHICAGO Working Paper October 1990, WP-1990-17 5 Table 2 Implications of Alternative Interest Rates in Stock-Watson Tests, 1960-1985 Treasury Bills Commercial Paper F-Statistic for Money 2.187 (0.045) 1.085 (0.372) F-Statistic for Interest Rate 0.829 (0.620) 1.288 (0.225) F-Statistic for Money 2.774 (0.012) 1.498 (0.179) F-Statistic for Interest Rate 0.811 (0.639) 1.154 (0.316) F-Statistic for Money 2.181 (0.045) 1.189 (0.312) F-Statistic for Interest Rate 0.847 (0.602) 1.157 (0.314) Trends Included No Time Trend Linear Time Trend Linear, Quadratic Time Trends Note: Numbers in parentheses are marginal significance levels. The sample period is 1960:2-1985:12. FRB CHICAGO Working Paper October 1990, WP-1990-17 6 Table 3 Implications of Alternative Interest Rates in Stock-Watson Tests, 1960-1988 Treasury Bills Commercial Paper F-Statistic for Money 1.084 (0.372) 0.573 (0.752) F-Statistic for Interest Rate 0.842 (0.607) 1.603 (0.090) F-Statistic for Money 1.356 (0.232) 0.700 (0.650) F-Statistic for Interest Rate 0.813 (0.637) 1.499 (0.123) F-Statistic for Money 1.019 (0.413) 0.591 (0.737) F-Statistic for Interest Rate 0.884 (0.563) 1.498 (0.123) Trends Included No Time Trend Linear Time Trend Linear, Quadratic Time Trends Note: Numbers in parentheses are marginal significance levels. The sample period is 1960:2-1988:12. FRB CHICAGO Working Paper October 1990, WP-1990-17 7 Table 4 F-Statistics for Expanded Stock-Watson Equation 1960:2-1985:12 1960:2-1988:12 /^-Statistic for Money 1.425 (0.205) 0.539 (0.779) F-Statistic for Paper Rate 0.786 (0.665) 0.913 (0.535) F-Statistic for Paper-Bill Spread 3.419 (0.0001) 3.249 (0.0002) F-Statistic for Constraint 3.787 (0.00002) 3.973 (0.00001) Note: Numbers in parentheses are marginal significance levels. Constraint forces coefficients on the paper rate and the paper-bill spread to be equal in magnitude and opposite in sign. as in Stock and Watson’s work) warrants rejecting this constraint at even stronger significance levels in both sample periods. These additional results do not contradict the conclusion that, between the Trea sury bill rate and the commercial paper rate, the latter is superior for purposes of assessing financial influences on nonfinancial activity, nor do they affect the paral lel conclusion that Stock and Watson’s finding of a strongly statistically significant effect of money on real output depends on their use of the Treasury bill rate instead of the commercial paper rate. As Friedman and Kuttner (1990) emphasized in a different context, however, they do suggest that the sources of imperfect covari ation between these two interest rates — presumably including an important role for a default premium that varies over time as perceptions of business creditwor thiness change — capture more of the relevant information about what aspects of financial markets matter for the determination of real income than do movements in either interest rate by itself, or fluctuations in money. FRB CHICAGO Working Paper October 1990, WP-1990-17 8 Footnotes 1 Instead using long-tenn interest rates or equity prices would make interpreting positive results more problematic because of die inherently anticipatory nature of long-lived asset markets. See Friedman (1984) for a comparative treatment of long- versus short-term interest rates, and Eichenbaum and Singleton (1986) for a discussion of equity prices, in this context. 2 The F-statistics reported by Stock and Watson, in the order shown in the table, were 2.39, 3.04 and 2.50. The differences tire attributable to subsequent data revisions. 3 The F-statistics reported by Stock and Watson were, in order, 2.68, 1.75 and 1.49. 4 Eichenbaum and Singleton were incorrect in stating (p. 125) that Sims had used the Treasury bill rate; see Sims (p. 252). FRB CHICAGO Working Paper October 1990, WP-1990-J7 9 References Eichenbaum, Marlin, and Singleton, Kenneth J. “Do Equilibrium Real Busi ness Cycle Theories Explain Postwar U.S. Business Cycles?” Fischer (ed.), Cambridge: MIT Press, 1986. N E Mcocnmc Ana 18. B R areoois nul 96 Friedman, Benjamin M. “The Roles of Money and Credit in Macroeconomic Anal ysis.” Tobin (ed.), Washington: The Brookings Institution, 1983. Mcocnmc,PieadQatte: sasiM m areoois rcs n uniisEsy n e oyoAtu M Ou. r frhr . kn Friedman, Benjamin M. “The Value oflntermediate Targets in Implementing Mon etary Policy.” Federal Reserve Bank of Kansas City, Kansas City: 1984. PietbltadP b rcSaiiyn u l Plc. i oiy c Friedman, Benjamin M., and Kuttner, Kenneth N. “Money, Income, Prices and Interest Rates after the 1980s.” Federal Reserve Bank of Chicago Working Paper #1990-11, 1990. Litterman, Robert B., and Weiss, Lawrence. “Money, Real Interest Rates and Out put: A Re-interpretation of Postwar U.S. Data.” , 53 (January, 1985), 128-156. Eooerc cnmtia Sims, Christopher A. “Comparison of lnterwar and Postwar Business Cycles: Monetarism Reconsidered.” , 70 (May, 1980), 250-257. Aeia Eooi Rve mrcn cnmc eiw Stock, James H., and Watson, Mark W. “Interpreting the Evidence on MoneyIncome Causality.” 40 (January, 1989), 161-182. JunloEooerc, ora fcnmtis FRB CHICAGO Working Paper October 1990, WP-1990-17 10 Working Papers and Staff Memoranda The following lists papers developed in recent years by the Bank's research staff. Copies of those materials that are currently available can be obtained by contacting the Public Information Center (312) 322-5111. Working Paper Series A series of research studies on regional economic issues relating to the Seventh Federal Reserve District, and on financial and economic topics. REGIONAL ECONOMIC ISSUES Taxation of Public Utilities Sales: State Practices and the Illinois Experience WP-86-1 Measuring Regional High Tech Activity with Occupational Data WP-87-1 Alternative Approaches to Analysis of Total Factor Productivity at the Plant Level WP-87-2 Industrial R&D An Analysis of the Chicago Area WP-87-3 Metro Area Growth from 1976 to 1985: Theory and Evidence WP-89-1 Unemployment Insurance: A State Economic Development Perspective WP-89-2 DaeF SeeadWlim.Tsa in . igl n ila A et Aek SGeeadWlim.Tsa lna . is n ila A et Rbr H ShobsadPiiR Irieih oet . cnru n hlp. salvc Aek SGeeadWlim .Tsa lna . is n ila A et Wlim.Tsa ila A et Wlim.TsaadNtle.Dvl ila A et n aaiA aia AWindow of Opportunity Opens for Regional Economic Analysis: BEA Release Gross State Product Data Aek SGee lna . is WP-89-3 Determining Manufacturing Output for States and Regions WP-89-4 The Opening of Midwest Manufacturing to Foreign Companies: The Influx of Foreign Direct Investment WP-89-5 PiiR Irieih n Wlim .Tsa hlp. salvcad ila A et Aek SGee lna .is l Working paper series continued A New Approach to Regional Capital Stock Estimation: Measurement and Performance WP-89-6 Why has Illinois Manufacturing Fallen Behind the Region? W P-89-7 Regional Specialization and Technology in Manufacturing W P-89-8 Theory and Evidence of Two Competitive Price Mechanisms for Steel WP-89-9 Aek SGeead oetI Shobs lna . is n Rbr I cnru . Wlim.Tsa ila A et Aek SGeeadWlim.Tsa lna . is n ila A et Crsohr re,PiiR Irieih n Rbr H Shobs hitpe Ecg hlp. salvcad oet . cnru Regional Energy Costs and Business Siting Decisions: An Illinois Perspective WP-89-10 Manufacturing's Changeover to Services in the Great Lakes Economy WP-89^12 DvdR AlrieadWlim .Tsa ai . ladc n ila A et Wlim .Tsa ila A et Construction of Input-Output Coefficients with Flexible Functional Forms WP-90-1 Regional Regulatory Effects on Bank Efficiency W P-90-4 Regional Growth and Development Theory: Summary and Evaluation W P-90-5 Institutional Rigidities as Barriers to Regional Growth: A Midwest Perspective W P-90-6 PiiR Irieih hlp. salvc DulsD Eaof n PiiR Irieih oga . vnfad hlp. salvc Gofe J .Hwns efry D eig McalKni ihe edx ISSUES IN FINANCIAL REGULATION Technical Change, Regulation, and Economies of Scale for Large Commercial Banks: An Application of a Modified Version of Shepard's Lemma DulsD Eaof PiiR.salvcadRnalC Mri oga . vnf, hlp Irieih n adl . ers WP-89-11 2 Working paper series continued Reserve Account Management Behavior: Impact of the Reserve Accounting Scheme and Carry Forward Provision W P-89-12 Are Some Banks too Large to Fail? Myth and Reality WP-89-14 Variability and Stationary of Term Premia W P-89-16 A Model of Borrowing and Lending with Fixed and Variable Interest Rates WP-89-17 Do "Vulnerable" Economies Need Deposit Insurance?: Lessons from the U.S. Agricultural Boom and Bust of the 1920s W P-89-18 The Savings and Loan Rescue of 1989: Causes and Perspective WP-89-23 The Impact of Deposit Insurance on S&L Shareholders' Risk/Retum Trade-offs W P-89-24 Payments System Risk Issues on a Global Economy W P-90-12 DulsD Eaof oga . vnj Gog G Kumn ere . afa R m nP D GnaoadJmsTMsr a o . e enr n ae . oe Toa Mnsha hms odcen CalsW Clmrs hre . aoii Gog G Kumn ere . afa EiaBee I ljh rwrI I Hret . aradDuls .Eaof ebr LBe n oga D vnj MACRO ECONOMIC ISSUES Back of the G-7 Pack: Public Investment and Productivity Growth in the Group of Seven WP-89-13 Monetary and Non-Monetary Sources of Inflation: An Error Correction Analysis WP-89-15 Trade Policy and Union Wage Dynamics WP-89-19 DvdA Acae ai . shur KnehN Ktnr ent . ute Eln .Rsmn leR isa 3 Working paper series continued Investment Cyclicality in Manufacturing Industries W P-89-20 Labor Mobility, Unemployment and Sectoral Shifts: Evidence from Micro Data WP-89-22 BueC Ptre adWlim .Srus rc . eesn n ila A tas PaahLugn,Rcad oesnadYn-onSn rks onai ihr Rgro n agHo on Unit Roots in Real GNP: Do We Know, and Do We Care? W P-90-2 Money Supply Announcements and the Market's Perception of Federal Reserve Policy WP-90-3 Sectoral Shifts in Interwar Britain W P-90-7 Money, Output, and Inflation: Testing the P-Star Restrictions WP-90-8 Current Real Business Cycle Theories and Aggregate Labor Market Fluctuations WP-90-9 Lwec JCrsin adMri Ecebu arne. hitao n atn ihnam See Srni adVf Tra tvn togn n ea ahn PaahLugn adM r Rs rks onai n a k uh KnehN Ktnr ent . ute Lwec JCrsin adMri Ecebu arne. hitao n atn ihnam The Output, Employment, and Interest Rate Effects of Government Consumption WP-90-10 Money, Income, Prices and Interest Rates after the 1980s WP-90-11 Real Business Cycle Theory: Wisdom or Whimsy? WP-90-13 Macroeconomic Models and the Term Structure of Interest Rates WP-90-14 SR oAygr, arneJCrsin adMri Ecebu . a iaai Lwec . hitao n atn ihnam Bnai M Fida adKnehN Ktnr ejmn . remn n ent . ute Mri Ecebu atn ihnam See Srni tvn togn 4 Working paper series continued Stock Market Dispersion and Real Economic Activity: Evidence from Quarterly Data WP-90-15 Term-Structure Spreads, The Money Supply Mechanism, and Indicators of Monetary Policy WP-90-16 Another Look at the Evidence on Money-Income Causality WP-90-17 PaahLugn,M r Rs adWlimTv rks onai a k uh n ila ae Rbr D Luet oet . arn Bnai M Fida adKnehN Ktnr ejmn . remn n ent . ute 5 Staff Memoranda A series of research papers in draft form prepared by members of the Research Department and distributed to the academic community for review and comment. (Series discontinued in December, 1988. Later works appear in working paper series). Risks and Failures in Banking: Overview, History, and Evaluation SM-86-1 The Equilibrium Approach to Fiscal Policy SM-86-2 Banking Risk in Historical Perspective SM-86-3 The Impact of Market, Industry, and Interest Rate Risks on Bank Stock Returns SM-86-4 Wage Growth and Sectoral Shifts: New Evidence on the Stability of the Phillips Curve SM-87-1 Testing Stock-Adjustment Specifications and Other Restrictions on Money Demand Equations SM-87-2 The Truth About Bank Runs SM-87-3 On The Relationship Between Standby Letters of Credit and Bank Capital SM-87-4 Alternative Instruments for Hedging Inflation Risk in the Banking Industry SM-87-5 The Effects of Regulation on Bank Participation in the Market SM-87-6 Bank Stock Valuation: Does Maturity Gap Matter? SM-87-7 Gog JBntnadGog G Kumn ere. eso n ere . afa DvdAa Acae ai ln shur Gog G Kumn ere . afa EiaBee,IadCegF wLe ljh rwrII n hn e e Eln.Rsmn leR isa RnalC Mri adl . ers Gog G Kumn ere . afa Gr D KpehvradRgrSoe ay . opnae n oe tvr Gr D KpehvradCegF Le ay . opnae n hn . e Gr D Kpehvr ay . opnae Vf Tra ea ahn 6 Staff Memoranda continued Finite Horizons, Intertemporal Substitution and Fiscal Policy SM-87-8 Reevaluation of the Structure-Conduct-Performance Paradigm in Banking SM-87-9 Net Private Investment and Public Expenditure in the United States 1953-1984 SM-87-10 DvdAa Acae ai ln shur DulsD Eaof n DaaL Frir oga . vnfad in . ote DvdAa Acae ai ln shur Risk and Solvency Regulation of Depository Institutions: Past Policies and Current Options SM-88-1 Public Spending and the Return to Capital SM-88-2 Is Government Spending Stimulative? SM-88-3 Securities Activities of Commercial Banks: The Current Economic and Legal Environment SM-88-4 A Note on the Relationship Between Bank Holding Company Risks and Nonbank Activity SM-88-5 Duration Models: A Taxonomy SM-88-6 Gog JBntnadGog G Kumn ere.eso n ere . afa DvdAcae ai shur DvdAcae ai shur Gog G Kumnad ar R Mt ere . afa n Lry . oe Eia Bee,II ljh rwr I G 0 Bewg Gog G KumnadCnhaM Lta . . ira, ere . afa n yti . at Durations of Nondefault-Free Securities G O BewgadGog G Kumn . . ira n ere . afa Is Public Expenditure Productive? DvdAcae ai shur SM-88-7 1 Staff Memoranda continued Commercial Bank Capacity to Pay Interest on Demand Deposits: Evidence from Large Weekly Reporting Banks SM-88-8 Imperfect Information and the Permanent Income Hypothesis SM-88-9 EiaBee,I adToa H Mnsha ljh rwr I n hms . odcen I AhjtVBnre adKnehN Ktnr bii . aeje n ent . ute Does Public Capital Crowd out Private Capital? SM-88-10 Imports, Trade Policy, and Union Wage Dynamics SM-88-11 Dvd shur ai Acae Eln isa leRsmn 8
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