Movements in the Equity Premium REAL BOND RATES increased sharply in the early 1980s and have remained high since. Even today, in the midst of a world recession and low U.S. and Japanese short real rates, long real rates throughout the world remain unusually high. Pessimists trace the high rates to a decrease in the supply of capital. They point to the long string of fiscal deficits and to the decline in household saving and warn of the disappearance of thrift. Optimists trace the high rates to an increase in the demand for capital and point to the high profit opportunities unleashed by the conservative revolutions of the 1980s. These factors have surely played a role. But there is more at work, for consider the following fact: while expected real rates on bonds have indeed been high for more than a decade, expected real rates of return on stocks appear, if anything, to have declined slightly. This suggests that the focus should not only be on the increase in bond rates, but also on the simultaneous increase in bond rates and decrease in equity rates: on the decrease in the equity premium. This is the focus of this paper. In the first section, I construct expected real rates on short-and medium-term bonds for a number of OECD countries from 1978 on, using commercial forecasts of inflation available at the time. I stop short of constructing expected real rates of return on stocks, but by looking at the underlying components, I argue that the 1980s were indeed associated with a sharp decrease in the equity premium. 1. Ibbotson Associates (1992).

Language and communication deficits are among the core features of autism spectrum disorder (ASD). Reduced or reversed asymmetry of language has been found in a number of disorders, including ASD. Studies of healthy adults have found an association between language laterality and anatomical measures but this has not been systematically investigated in ASD. The goal of this study was to examine differences in gray matter volume of perisylvian language regions, connections between language regions, and language abilities in individuals with typical left lateralized language compared to those with atypical (bilateral or right) asymmetry of language functions. 14 adolescent boys with ASD and 20 typically developing adolescent boys participated, including equal numbers of left-and right-handed individuals in each group. Participants with typical left lateralized language activation had smaller frontal language region volume and higher fractional anisotropy of the arcuate fasciculus compared to the group with atypical language laterality, across both ASD and control participants. The group with typical language asymmetry included the most right-handed controls and fewest left-handers with ASD. Atypical language laterality was more prevalent in the ASD than control group. These findings support an association between laterality of language function and language region anatomy. They also suggest anatomical differences may be more associated with variation in language laterality than specifically with ASD. Language laterality therefore may provide a novel way of subdividing samples, resulting in more homogenous groups for research into genetic and neurocognitive foundations of developmental disorders.

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This paper reviews and analyses the current definitions of bubbles in asset prices. It makes the case that one cannot identify a bubble immediately, but one has to wait a sufficient amount of time to determine whether the previous prices can be justified by subsequent cash flows. The paper proposes an operational definition of a bubble as any time the realised asset return over given future period is more than two standard deviations from its expected return. Using this framework, the paper shows how the great crash of 1929 and 1987-both periods generally characterised as bubblesprove not to be bubbles but the low point in stock prices in 1932 is a 'negative bubble.' The paper then extends this analysis to the internet stocks and concludes that it is virtually certain that it is a bubble.

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