There is a growing awareness that monetary policy is not super-neutral in many countries. In particular, in high inflation economies, a significant amount of evidence indicates that inflation is negatively related to economic activity. For example, in their study of Argentina and Brazil, Bae and Ratti (2000) find that higher rates of money growth are associated with lower levels of output. By comparison, inflation may be positively correlated with output in low inflation economies. Notably, Bullard and Keating (1995) demonstrate that inflation is positively correlated with output in some low inflation countries while in others there is no relationship. Ahmed and Rogers (2000) focus on the U.S. economy. In their analysis, inflation and output are positively correlated. It has also been observed that inflation is generally higher in developing countries than industrialized economies.
With the increasing availability of high frequency financial data, the development of realized variance (RV) has made tremendous progress both on the theoretical front and in empirical applications, (see for instance Andersen and Bollerslev, 1998; Andersen, Bollerslev, Diebold, and Labys, 2001, 2003; Barndorff Nielsen and Shephard, 2004a). The focus of this literature is the construction of a flexible model-free measure of integrated variance for asset returns.
Credit rationing, once a major issue of debate in the literature on banking, has moved out of the spotlight since the mid-1990s. If interest in the matter has waned, it is not because inquiry reached an analytical dead end or, on the contrary, achieved definitive results. Although the numerous attempts made in the 1960s and 1970s to explain positive excesses in credit demand at the equilibrium interest rate proved unfruitful, at the turn of the 1980s the fundamental works of Keeton (1979, ch. 3) and Stiglitz and Weiss (1981) provided a rigorous, if restrictive, justification of ,a href="http://www.acrobatplanet.com/non-fictions-ebook/ebook-financial-constraints-and-unemployment-equilibrium.html">equilibrium credit rationing in the presence of ex ante asymmetries of information between a lending bank and a subset of borrowers with projects entailing different but, for the bank, indistinguishable degrees of risk.
