After World War II, the U.S. saw other important shifts, including deconcentration - the movement of people and jobs from large, dense MSAs to small, less dense ones. This article looks at various aspects of deconcentration to see just how fast growth has been in less dense MSAs, whether trends for population and employment are the same, and whether the experience of MSAs in the frostbelt and sunbelt has been the same. When the weather forecast calls for rain, people will carry umbrellas. In financial markets, the behavior of exchange rates and the prices of assets such as stocks and bonds depend not only on the most likely future outcomes but also on possible, but less likely, outcomes. But a possible outcome can sometimes be so different from today's conditions that asset prices, which incorporate extreme possibilities, make financial markets look flawed, even if they aren't.
Economists call such a condition a peso problem.
In this article, Keith Sill talks about how peso problems can affect asset values. As a result, when policies and forecasts are viewed from the perspective of today's data, they may not seem sensible. Recognizing this problem, the Research Department at the Philadelphia Fed created a real-time data set so that economists today have the same data that were available to policymakers and forecasters in the past. In the end, Boehne argues, the financial services industry will be different in terms of its structure and delivery systems. In the 18th century, Adam Smith offered his theory of the invisible hand and the view that perfect competition is the main spur to economic efficiency.