Olivier Accominotti, Delio Lucena-Piquero, Stefano Ugolini, 23 April 2020

Informational problems on the money market can lead to credit booms and financial panics. This column shows that, during the first globalisation of 1880-1914, uncollateralised international corporate debts were transformed into highly liquid and safe money market instruments through a refined process of information production involving various intermediaries. This suggests that the design of money market instruments is an essential determinant of the liquidity and resilience of money markets.

Claudia Steinwender, 11 April 2018

Flows of information, though critical for the efficient functioning of markets, are often limited in reality, potentially distorting trade flows and price patterns. This column uses the transatlantic telegraph connection of 1866 to explore how changes in information frictions affected cotton markets in the US and UK. The results show that information frictions decrease average trade flows and the volatility of trade, leading to substantial welfare losses.

Philippe Andrade, Richard Crump, Stefano Eusepi, Emanuel Moench, 23 December 2014

Expectations are critical for macroeconomics and financial markets. But the expectation-formation process is not well understood. This column discusses some empirical characteristics of forecast disagreement from professional forecasters in the US, and discusses the ‘information frictions’ that underlie the heterogeneity of expectations.

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