STOCK RETURNS, INFLATION, AND REAL OUTPUT

This paper provides empirical evidence on the extent to which the inverse relationship between real stock returns and inflation in recent years is causal or spurious. The results indicate that this relationship is spurious and can be explained by the inverse correlation between unexpected inflation and unexpected real output. The expected and unexpected real output and inflation variables are generated from the ASA/NBER Business Outlook Surveys.     

ON INFLATION AND REAL PRICE VARIABILITY

This paper studies the consequences of costly price adjustments for the variability of real prices accompanying inflation. For constant-elasticity demand and cost of production it is shown that a higher demand, a lower cost of production, or a lower cost of price adjustment leads to less intertemporal variability of real prices. If the marginal cost of production does not increase "too" fast, then the average real price is less than the real price that would prevail in the absence of inflation; additionally, a higher demand, a lower cost of production, or a lower cost of price adjustment leads to a higher level of real prices.     

STOCK RETURNS, ASYMMETRIC VOLATILITY, RISK AVERSION, AND BUSINESS CYCLE: SOME NEW EVIDENCE

We study how three interrelated phenomena—excess stock returns and risk relation, risk aversion, and asymmetric volatility movement—change over business cycles. Using an asymmetric generalized autoregressive conditional heteroskedasticity in mean model and a Markov switching model, we find that excess stock return increases and asymmetric volatility movement is weakened during boom periods. This suggests that investors become more risk-averse during boom periods (i.e., procyclical risk aversion), which we confirm using a calibration of a simple equilibrium model . ( JEL C32, E32, G12)     

A POSITIVE THEORY OF INFLATION AND INFLATION VARIANCE

Empirically, inflation and the variance of inflation are positively associated. This paper develops a model that provides a potential explanation for this relationship in tern of the incentives facing the policymaker in a "discretionary equilibrium." The model can also account for an empirical association between inflation and measures of real output instability. There is, however, no direct causal link whatever from the average rate of inflation to either the variance of inflation or that of real output.     

REAGANOMICS AND REPUTATION REVISITED

This paper considers a reformulation of Backus and Driffill's model of credibility following a change in regime. Following Tabellini, we alter their model to better fit macroeconomic policymaking as it is formulated in the U.S. where monetary and fiscal policies are made by independent policymakers. By assuming that policymakers of divergent views have recently entered office and so have no track record, the game's equilibrium corresponds to the U.S. experience during the first years of the Reagan administration.     

INFLATION AND GOVERNMENT DEFICITS

There is a pronounced positive correlation of inflation and government deficits in the United States since World War II. The purpose of this paper is to test the three leading explanations of this correlation. These three explanations are: (a) a deficit increases prices through a wealth effect; (b) a deficit results in the Federal Reserve purchasing debt, thus increasing the money supply and prices; and (c) expected inflation increases the deficit (which is the change in the nominal value of bonds). No support is found for either of the first two hypotheses. The results indicate that expected government deficits have no significance for future inflation.     

UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY

In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output.     

EXPECTED INFLATION AND INTEREST RATES

While there may have been a Darby-Feldstein effect in the 1960's (interest rates rising by more than expected inflation because of tax considerations), the relationship is so variable that it more likely reflects changing investor confidence in the expected returns to capital assets. In addition, the degree of capacity utilization appears to have a strong influence on short-term interest rates, and there is a statistically significant but quantitatively small liquidity effect from changes in the growth rate of money.     

CONVEX COSTS AND THE MERGER PARADOX REVISITED

Returning to the contention that convex costs provide a resolution to the merger paradox, we show that for reasonable degrees of convexity, the minimum market share needed for merger to be profitable remains close to that associated with linear costs. Moreover, convex costs do not eliminate the free rider problem identified as part of the merger paradox. Finally, we retain convex costs while modeling a firm-by-firm sequential merger process, showing that the paradox constrains a larger share of potential mergers. These findings help reduce the relevance of convex costs as a resolution to the merger paradox. ( JEL L12, L13)     

AESTHETICS AND PRAGMATICS OF FAMILY THERAPY REVISITED

After reacting specifically to Simon's (1992) proposal for the integration of first and second-order therapies, I note how he, as well as Anderson and Goolihian (1988, 1990), focus primarily on deliberate, intentional ways to promote a respectful stance in therapy. Although a consideration of which intentional stances and strategies will promote the most helpful conversations in therapy is important, an even more critial question concerns the possible limitations of intentional efforts and the relation of conscious mind to other natural orders of mind in the living world. I suggest that deliberate efforts on the part of theapists toward any intended therapeutic outcomes must be comlemented by instictive and intuitive ways of participating with clients.     

INFLATION AND ASYMMETRIC OUTPUT ADJUSTMENTS BY FIRMS

Using ordered probit analyses of a unique micro data set, we find evidence of output asymmetry that is systematically related to inflation and to price asymmetry. As predicted by theory, firms are more likely at higher rates of inflation to raise prices in response to positive cost and demand shocks and less likely to lower prices in response to negative cost and demand shocks. The expected effects of higher inflation on output asymmetry, however, come primarily from cost and demand increases and to a lesser (and statistically insignificant) extent from cost and demand decreases. (JEL E3, D4)     

CROSS-COUNTRY EVIDENCE ON LONG-RUN GROWTH AND INFLATION

While inflation is generally inversely related to growth, I show that estimates of the relationship seer two robustness problems which plague a variety of model specifications. First, growth-inflation results are highly sensitive to modifications to the country sample, limited from the start to low- and moderate-inflation countries. Second, results are also sensitive to modifications in the time period of analysis. In conjunction with the regression specification sensitivity documented by Levine and Renelt [1992], these results should further discourage the practice cf quantifying inflation's effects with cross-county growth regressions.     

INEFFICIENT STANDARD ADOPTION: INERTIA AND MOMENTUM REVISITED

This article examines the possibility that consumers will adopt an inefficient standard. When there are successive generations of consumers, the current generation will not consider the costs and benefits to past and future generations of adopting a new standard. If a standard is proprietary, the incentives of a firm to induce adoption of the standard generally do not match the social incentives. The divergence is caused by the firm's imperfect ability to appropriate the future surplus generated by the standard. (JEL D62 , L1 )     

SAMUELSON'S DICTUM AND THE STOCK MARKET

Samuelson has offered the dictum that the stock market is "micro efficient" but "macro inefficient." That is, the efficient markets hypothesis works much better for individual stocks than it does for the aggregate stock market. In this article, we review a strand of evidence in recent literature that supports Samuelson's dictum and present one simple test, based on a regression and a simple scatter diagram, that vividly illustrates the truth in Samuelson's dictum for the U.S. stock market data since 1926.(JEL G14 )     

WHERE RELATIONAL THEORY AND ATTACHMENT THEORY INTERSECT: A REAL RELATIONSHIP AND A REAL ATTACHMENT

This paper demonstrates the importance of understanding the client’s early attachment patterns and of promoting a real attachment in the therapeutic dyad. A review of relational theory reinforces current acceptance of therapist self-disclosure as a tool for engaging difficult clients. Additionally, therapists can identify clients’ early attachment experiences and promote growth in fragile clients by allowing them judicious access to their inner world, thereby encouraging the formation of a real attachment. Case examples illustrate how to identify early attachment patterns and one therapist’s creative use of self in developing real, therapeutic attachments with her clients.     

MYTHOLOGIES REVISITED: ROLAND BARTHES AND THE LEFT

This essay arises from the author's scepticism about the received notion, prevalent both in literary and cultural studies, that Roland Barthes's work of the 1960s constituted an abandonment of the previous decade's social critique. The paper develops the argument that, to the contrary, understanding Barthes's socio-cultural development following World War II and in the French cultural context helps to situate the political engagement of his writings in the 1950s and to clarify the continued political commitment of this work from the 1960s onward. This essay addresses a series of questions: what was Barthes's relationship to the 1950s French intelligentsia that prepared his active participation in the heterodoxical Marxist journal, Arguments, a forum for many of the urgent intellectual debates between 1956-62? What is the relationship of this activity to his writings of the early 1950s, developed into Mythologies in 1957, as well as to the shift toward semiology and structuralism and to the purported abandonment of social critique betokened by this shift? How do these phases inform the different readings of Barthes's work developed in more recent interpretations of his writing? It is argued that we would do better to view the structuralist phase and especially the ‘later’ Barthes (from the late 1960s onward) more fully and deliberately in relation to the early, explicitly political period. This revised perspective, one not limiting Barthes to works such as Mythologies, will help us better comprehend Barthes's continuing legacy for sociosemiotic critique both in literary criticism and in cultural studies and to create new ground for interdisciplinary dialogue that is very much needed in an era of questioning the limits and borders of this field.