Vol. 88, No. 1
First Quarter 2003

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Direct Investments in Securities: A Primer
Ramon P. DeGennaro
This article discusses DRIPs, describing how the financial services industry has evolved to meet the needs of the small investor. The author identifies the remaining limitations on this sort of investment, noting that mutual funds continue to offer convenience and unmatched diversification for small accounts.

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How Much Do We Really Know about Growth and Finance?
Paul Wachtel
This article assesses the econometric evidence about the finance-growth relationship. The author first describes the regression framework that has become the standard for assessing this relationship. He outlines some methodological reservations about the evidence used to establish this consensus, pointing out the drawbacks of using aggregate measures of activity.

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Pension Systems and Aggregate Shocks
Karsten Jeske
To quantify the sensitivity of different retirement schemes to large aggregate shocks, this article provides a model economy in which aggregate shocks affect not only financial market returns but also a pay-as-you-go (PAYGO) pension system.

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Pricing Firms on the Basis of Fundamentals
Mark Kamstra
This article focuses on fundamental valuation, a technique that determines the right price by forecasting cash flows from a stock market investment and calculating what that income is worth.