This textbook introduces economic explanations for the organization of the financial system and the interconnection between the financial system and the economy. Hubbard stresses the application of theory in sections devoted to interest rates, financial markets, financial institutions, the money supply process and monetary policy, and the financial system and the macroeconomy.
R. Glenn Hubbard is a visiting scholar at AEI.
Table of Contents
Introducing Money and the Financial System
Money and the Payments System
Overview of the Financial System
Interest Rates and Rates of Return
The Theory of Portfolio Allocation
Determining Market Interest Rates
Risk Structure and Term Structure of Interest Rates
The Foreign-Exchange Market and Exchange Rates
Derivative Securities and Derivative Markets
Information and Financial Market Efficiency
Reducing Transactions and Information Costs
What Financial Institutions Do
The Business of Banking
The Banking Industry
Banking Regulation: Crisis and Response
Banking in the International Economy
The Money Supply Process
Changes in the Monetary Base
Organization of the Federal Reserve System
Monetary Policy Tools
The Conduct of Monetary Policy
The International Financial System and Monetary Policy
The Demand for Money
Linking the Financial System and the Economy: The IS-LM-FE Model
Aggregate Demand and Aggregate Supply
Money and Output in the Short Run
Information Problems and Channels for Monetary Policy
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