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July/August 1994

Posted 1994-07-01

Explanations for the Increased Riskiness of Banks in the 1980s

by Sangkyun Park

In the 1980s, the number of bank failures increased sharply, and banks in general experienced increasing problem loans and dwindling capital. The main explanations for the deterioration of bank asset quality include increased incentives for risk-taking by bank stockholders, desperate risk-taking by bank managers to increase profits, and unexpected economic shocks.

Posted 1994-07-01

Trade Between the United States and Eastern Europe

by Patricia S. Pollard

Most of the trade between the United States and Eastern Europe since the end of World War II has been very small. While the United States has maintained high tariffs on imports from most Eastern European countries—and restricted its own exports to them as well, particularly high technology—Eastern Europe has maintained trade restrictions on imports from the United States.

Posted 1994-07-01

The New Structure of the Housing Finance System

by John C. Weicher

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) marked both the culmination of a 20-year period of changes in the U.S. housing finance system and the beginning of a period of legislative reforms intended to forestall any recurrence of the savings-and-loan industry debacle that forced the enactment of FIRREA.

Posted 1994-07-01

The Inflation Tax and the Marginal Welfare Cost in a World of Currency and Deposits

by Alvin L. Marty

Since inflation is the rate at which the purchasing power of money declines, it is a tax on real money balances. Alvin L. Marty provides an analysis that determines the optimal rate of inflation as an efficient tax rate.


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