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The potential of the paper-bill spread to foresee business cycle changes dwindled in the 1980s as liquidity of commercial paper increased. The latter incited investors to consider paper as an approximate alternative for Treasury bills. Consequently, shocks to the paper and bill markets did not significantly affect the paper-bill spread but were actually incorporated by proportional yield alterations in both markets. This findings veer away from explanations that attribute the predictive decline to market contractions and to changes in paper and bill supplies unrelated to business conditions.