Raising the $2,000 annual limit on individual retirement account contributions would boost personal savings and spur higher economic growth, writes Shahira Knight, an economist on Congress' Joint Economic Committee.

Ms. Knight dismisses arguments that IRAs simply encourage consumers to shift savings out of taxable investments.

Increasing contribution limits also would benefit low-income families, she writes. Although these families are unlikely to use the accounts, they would benefit from the faster economic growth rates that an increase in the country's savings would spark.

For a copy of "Expanding IRA Benefits," call 202-224-5171 or visit www.house.gov/jec/.

Mutual funds provide long-term stability to the stock market, although they result in significant short-term volatility. That's the conclusion of Vincent Warther of the University of Michigan Business School, who uses computers to model the influence of mutual funds on the market.

His findings debunk the view that mutual funds destabilize the market because investors sell these assets whenever stock prices drop. Instead, he found that over the long haul-defined as at least a month-mutual fund investors have helped stabilize the market. But he also found that on a day-to-day analysis, mutual funds increase volatility as investors exit and enter funds.

For a copy of "Has the Rise of Mutual Funds Increased Market Instability?" e-mail bibooks brooks.edu or call 800-275-1447.

Adoption of a "prompt corrective action" doctrine by Japanese regulators is not a panacea, warns Michael Hutchinson.

The University of California, Santa Cruz, economics professor said implementing a prompt corrective action doctrine would allow Japanese regulators to quickly fix problems in the banking sector and increase the transparency of that country's banks.

But he writes that the Japanese first need to liquidate dying banks and write off bad loans that weigh down many balance sheets. "The piecemeal, case-by-case approach followed by authorities in dealing with nonperforming loans and particular banking institutions during the past seven years continues to cast an unfavorable shadow over the whole Japanese financial system," he says.

For a copy of "Financial Crisis and Bank Supervision: New Directions for Japan?" call 415-974-2163 or visit www.sf.frb.org.

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