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This paper examines financial market comovements across European transition economies and compares their experience to that of their regions. Correlations in monthly indices of exchange market pressures can partly be explained by direct trade linkages, but not by measures of other fundamentals. Higher-frequency data during three crisis periods reveals the presence of structural breaks in the relationship between exchange-, but not stock markets. While the reaction of markets during the Asian and Czech crises is muted, the pattern of high-frequency spillovers during the Russian crisis looks very similar to that observed in other regions during turbulent times.

Finance: General --- Foreign Exchange --- Investments: Stocks --- International Finance: General --- International Financial Markets --- Socialist Institutions and Their Transitions: Financial Economics --- General Financial Markets: General (includes Measurement and Data) --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Finance --- Currency --- Foreign exchange --- Investment & securities --- Stock markets --- Currency markets --- Stocks --- Exchange rate arrangements --- Exchange rates --- Financial markets --- Financial institutions --- Stock exchanges --- Foreign exchange market --- Russian Federation

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This paper studies the correlation between output growth and lagged stock returns in a panel of emerging market economies and advanced economies. It finds that the correlation is as strong in emerging market economies as in advanced economies. Asset prices therefore contain valuable information to forecast output also in emerging market economies. Moreover, the paper finds that the strength of the correlation between output growth and lagged stock returns is significantly related to a number of stock market characteristics, such as the number of listed domestic companies and initial public offerings and, especially, a high market capitalization to GDP ratio and English legal origin.

Finance: General --- Investments: Stocks --- Macroeconomics --- Financial Markets and the Macroeconomy --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Macroeconomics: Production --- Finance --- Investment & securities --- Stocks --- Stock markets --- Emerging and frontier financial markets --- Production growth --- Market capitalization --- Financial institutions --- Financial markets --- Production --- Financial services industry --- Stock exchanges --- Economic theory --- United States

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Policymakers often express concern that herding by financial market participants destabilizes markets and increases the fragility of the financial system. This paper provides an overview of the recent theoretical and empirical research on herd behavior in financial markets. It addresses the following questions: What precisely do we mean by herding? What could be the causes of herd behavior? What success have existing studies had in identifying such behavior? And what effect does herding have on financial markets?.

Finance: General --- Investments: Stocks --- Macroeconomics --- Public Finance --- Industries: Financial Services --- Financial Risk Management --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Inflation --- Deflation --- Social Security and Public Pensions --- International Financial Markets --- Investment & securities --- Finance --- Pensions --- Stocks --- Mutual funds --- Stock markets --- Asset prices --- Pension spending --- Financial institutions --- Financial markets --- Prices --- Asset valuation --- Asset and liability management --- Stock exchanges --- Asset-liability management --- United States

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This paper explores whether changes in the age distribution have significant effects on financial markets that are rational and forward-looking. It presents an overlapping generations model in which agents make a portfolio decision over stocks and bonds when saving for retirement- Using the model to simulate a baby boom-baby bust demonstrates that returns to baby boomers will be substantially below returns to earlier generations, even when markets are rational and forward-looking. This result is important because the current debate over how to reform pay-as-you-go pension systems often takes historical returns on financial assets—and on the equity premium—as given.

Finance: General --- Investments: Stocks --- Labor --- Macroeconomics --- Investments: Bonds --- Forecasting and Simulation: Models and Applications --- Portfolio Choice --- Investment Decisions --- Social Security and Public Pensions --- Macroeconomics: Consumption --- Saving --- Wealth --- Retirement --- Retirement Policies --- Aggregate Factor Income Distribution --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- General Financial Markets: General (includes Measurement and Data) --- Wages, Compensation, and Labor Costs: General --- Labour --- income economics --- Investment & securities --- Finance --- Consumption --- Income --- Stocks --- Securities markets --- National accounts --- Financial institutions --- Financial markets --- Wages --- Economics --- Capital market --- United States

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Large stocks of U.S. dollars and other hard currencies circulate in the transition economies, in Latin America, and in other countries that have experienced macroeconomic mismanagement. Using a monetary model that combines the legal restrictions and crime-theoretic traditions, this paper demonstrates how leaky exchange controls lead to currency substitution and progressive dollarization. The paper also analyzes the impact of dollarization on the ability of governments to earn seigniorage, the dynamics of dollarization in a growing economy, and the central role of expectations—specifically, confidence in the domestic currency—in determining the extent of dollarization and, potentially, in reversing it.

Finance: General --- Investments: Stocks --- Money and Monetary Policy --- Public Finance --- Demand for Money --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Foreign Exchange --- Open Economy Macroeconomics --- Trade Policy --- International Trade Organizations --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- International Financial Markets --- Monetary economics --- Public finance & taxation --- Investment & securities --- Finance --- Currencies --- Dollarization --- Anti-smuggling --- Stocks --- Currency markets --- Money --- Monetary policy --- Revenue administration --- Financial institutions --- Financial markets --- Smuggling --- Foreign exchange market --- United States