ABSTRACT
Chapter 11 gives a review of the measured profits to technical speculation found in Chapters 5-10; the profits are economically and statistically significant. A major issue is whether these measured profits are economic profits. It is possible that the profits might be explained as due to some sort of data problem, though in Chapter 11 we explained why we think this in not very likely. More likely, the measured profits actually exist but might be explained as due to time-varying risk premia. The evidence on time-varying risk premia as an explanation is inconclusive; much more work is needed to be confident one way or another. But while these issues are debated, policymakers must act. Chapter 11 considered the implications for private policymakers; given that current evaluation techniques make no effective use of the possibility of time-varying risk premia, there are strong incentives for private policymakers to act to take advantage of these measured profits. To the extent that these profits are economic profits, these actions will of course tend to make the market more efficient. In this chapter we discuss appropriate public policy actions in light of this book's results.
