Vol. 89, No. 1
First Quarter 2004

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Decomposing Inflation
Andrew Bauer, Nicholas Haltom, and William Peterman
As U.S. core inflation measures have declined in recent years, analysts have renewed their efforts to understand inflation dynamics. A common approach to this issue is to make inferences about how price changes of major components affect the aggregate inflation rate. This article takes a more rigorous approach, calculating and plotting the precise contributions of major consumer expenditure categories to core inflation measures over time.

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Leading Indicators of Country Risk and Currency Crises: The Asian Experience
Marcelle Chauvet and Fang Dong
This article aims to construct an early warning system for international currency crises using financial variables reflecting investors' expectations and banking distress, which are highly sensitive to changes in the economic environment.

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The News in Financial Asset Returns
Gerald P. Dwyer Jr. and Cesare Robotti
This article examines and answers two questions: First, what is a good way of extracting information about future economic activity from asset prices? Second, do financial asset returns help predict economic activity over horizons from one month to five years?