Review

"Flation”—not inflation, not deflation—is lifted from the title of a book by Abba P. Lerner. For the past 35 years in the United States and, indeed, in most of the world, policymakers and the public in general have been focused on the issue of inflation—that is, the continual upward drift in prices of the overwhelming fraction of goods and services produced in the economy.

This article uses a currency crisis framework to analyze the currency devaluation and debt default of post-Soviet Russia in August 1998. The authors show that even though the Russian economy recorded positive growth immediately preceding the default, the atmosphere was reflecting of an impending crisis.

Market efficiency remains a contentious topic among financial economists. The theoretical case for efficient markets rests on the notion of risk-free, cost-free arbitrage. In real markets, however, arbitrage is not risk-free or cost-free. In addition, the number of informed arbitrageurs and the supply of financial resources they have to invest in arbitrage strategies is limited.

Business recessions are notoriously hard to predict accurately, hence the quip that economists have predicted eight of the last five recessions. This article derives a six-month-ahead recession signal that reduces the number of false signals outside of recessions, without impairing the ability to signal the recessions that occur.

The strength of the U.S. productivity growth in the recent years has been attributed to technological improvements that are, in some sense, embodies in new types of capital equipment. However, traditional growth theory and growth accounting techniques—which emphasize the role of disembodied, neutral technological progress—are deficient in explaining this phenomenon.