Region Focus Featured Article

February 17, 2010

Richmond Fed Publication Examines the "Efficient Market Hypothesis"

Richmond, Va.

The efficient market hypothesis holds that financial markets are good at uncovering information about an asset's "true" value. But if financial markets are efficient, critics argue, how could investors have gotten things so wrong in the housing and securitization markets? This featured article in the latest issue of Region Focus surveys the debate over this prominent economic theory in the wake of the financial crisis.

Also in this issue:

  • Recessions and Entrepreneurship. Many companies got their start during recessionary periods. Perhaps that's because economic downturns provide important ingredients for business creation, such as a larger than usual supply of skilled and unemployed labor.
  • "Cash for Clunkers." What do economists have to say about the effects of this widely hailed stimulus program?
  • The Fate of Ginnie Mae. Could the Government National Mortgage Association – which guarantees mortgage-backed securities – be in trouble in the wake of the sharp decline in housing prices?

Region Focus, a quarterly business magazine published by the Federal Reserve Bank of Richmond, covers the economy and business activities of the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.

For free copies of Region Focus, contact the Bank's Research Publications division at 800.322.0565. The articles are available online at

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.


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