The Economics of Money, Banking and Financial Markets, Global Edition, 13th Edition
- Length: 720 pages
- Edition: 13
- Language: English
- Publisher: Pearson
- Publication Date: 2021-08-17
- ISBN-10: 1292409487
- ISBN-13: 9781292409481
- Sales Rank: #0 (See Top 100 Books)
For courses in money and banking, or general economics.
A unified framework for understanding financial markets
The Economics of Money, Banking and Financial Markets bringsa fresh perspective to today’s major questions surrounding financial policy.Influenced by his term as Governor of the Federal Reserve, Frederic Mishkinoffers students a unique viewpoint and informed insight into the monetarypolicy process, the regulation and supervision of the financial system, and theinternationalization of financial markets. The 13th Edition providesa unifying, analytical framework for learning that fits a wide variety ofsyllabi. And core economic principles and real-world examples organizestudents’ thinking and keep them motivated. After reading this text, studentsare well equipped to apply these financial models, terms, and equations todecisions that affect both their personal and professional lives.
Cover Applying Theory to the Real World: Applications and Boxes Title Page Copyright Dedication About the Author Brief Contents Contents in Detail Additional Contents on MyLab Economics Preface Part 1: Introduction Chapter 1: Why Study Money, Banking, and Financial Markets? 1.1 Why Study Financial Markets? Debt Markets and Interest Rates The Stock Market 1.2 Why Study Financial Institutions and Banking? Structure of the Financial System Banks and Other Financial Institutions Financial Innovation Financial Crises 1.3 Why Study Money and Monetary Policy? Money and Business Cycles Money and Inflation Money and Interest Rates Conduct of Monetary Policy Fiscal Policy and Monetary Policy 1.4 Why Study International Finance? The Foreign Exchange Market The International Financial System 1.5 Money, Banking, and Financial Markets and Your Career 1.6 How We Will Study Money, Banking, and Financial Markets Concluding Remarks Summary Key Terms Questions Applied Problems Data Analysis Problems Appendix to Chapter 1: Defining Aggregate Output, Income, the Price Level, and the Inflation Rate Aggregate Output and Income Real Versus Nominal Magnitudes Aggregate Price Level Growth Rates and the Inflation Rate Chapter 2: An Overview of the Financial System 2.1 Function of Financial Markets 2.2 Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 2.3 Financial Market Instruments Money Market Instruments Following the Financial News Money Market Rates Capital Market Instruments Following the Financial News Capital Market Interest Rates 2.4 Internationalization of Financial Markets Global Are U.S. Capital Markets Losing Their Edge? International Bond Market, Eurobonds, and Eurocurrencies World Stock Markets 2.5 Function of Financial Intermediaries: Indirect Finance Following the Financial News Foreign Stock Market Indexes Transaction Costs Global The Importance of Financial Intermediaries Relative to Securities Markets: An International Comparison Risk Sharing Asymmetric Information: Adverse Selection and Moral Hazard Economies of Scope and Conflicts of Interest 2.6 Types of Financial Intermediaries Depository Institutions Contractual Savings Institutions Investment Intermediaries 2.7 Regulation of the Financial System Increasing Information Available to Investors Ensuring the Soundness of Financial Intermediaries Financial Regulation Abroad Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 3: What Is Money? 3.1 Meaning of Money 3.2 Functions of Money Medium of Exchange Unit of Account Store of Value 3.3 Evolution of the Payments System Commodity Money Fiat Money Checks Electronic Payment E-Money FYI Are We Headed for a Cashless Society? Application Will Bitcoin or Other Cryptocurrencies Become the Money of the Future? 3.4 Measuring Money The Federal Reserve’s Monetary Aggregates Following the Financial News The Monetary Aggregates FYI Where Are All the U.S. Dollars? Summary Key Terms Questions Applied Problems Data Analysis Problems Part 2: Financial Markets Chapter 4: The Meaning of Interest Rates 4.1 Measuring Interest Rates Present Value Application Simple Present Value Application How Much Is That Jackpot Worth? Four Types of Credit Market Instruments Yield to Maturity Application Yield to Maturity on a Simple Loan Application Yield to Maturity and the Yearly Payment on a Fixed-Payment Loan Application Yield to Maturity and Bond Price for a Coupon Bond Application Yield to Maturity on a Perpetuity Application Yield to Maturity on a Discount Bond 4.2 The Distinction Between Interest Rates and Returns Global Negative Interest Rates? Japan First, Then the United States, Then Europe Maturity and the Volatility of Bond Returns: Interest-Rate Risk Summary 4.3 The Distinction Between Real and Nominal Interest Rates Application Calculating Real Interest Rates Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 5: The Behavior of Interest Rates 5.1 Determinants of Asset Demand Wealth Expected Returns Risk Liquidity Theory of Portfolio Choice 5.2 Supply and Demand in the Bond Market Demand Curve Supply Curve Market Equilibrium Supply and Demand Analysis 5.3 Changes in Equilibrium Interest Rates Shifts in the Demand for Bonds Shifts in the Supply of Bonds Application Changes in the Interest Rate Due to a Change in Expected Inflation: The Fisher Effect Application Changes in the Interest Rate Due to a Business Cycle Expansion Application Explaining Current Low Interest Rates in Europe, Japan, and the United States: Low Inflation and Secular Stagnation 5.4 Supply and Demand in the Market for Money: The Liquidity Preference Framework 5.5 Changes in Equilibrium Interest Rates in the Liquidity Preference Framework Shifts in the Demand for Money Shifts in the Supply of Money Application Changes in the Equilibrium Interest Rate Due to Changes in Income, the Price Level, or the Money Supply Changes in Income Changes in the Price Level Changes in the Money Supply 5.6 Money and Interest Rates Application Does a Higher Rate of Growth of the Money Supply Lower Interest Rates? Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 6: The Risk and Term Structure of Interest Rates 6.1 Risk Structure of Interest Rates Default Risk FYI Conflicts of Interest at Credit-Rating Agencies and the Global Financial Crisis Application The Coronavirus Pandemic and the Baa–Treasury Spread Liquidity Income Tax Considerations Summary Application Effects of the Trump Tax Cuts on Bond Interest Rates 6.2 Term Structure of Interest Rates Following the Financial News Yield Curves Expectations Theory Segmented Markets Theory Liquidity Premium and Preferred Habitat Theories Evidence on the Term Structure FYI The Yield Curve as a Forecasting Tool for Inflation and the Business Cycle Summary Application Interpreting Yield Curves, 1980–2020 Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 7: The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis 7.1 Computing the Price of Common Stock The One-Period Valuation Model The Generalized Dividend Valuation Model The Gordon Growth Model 7.2 How the Market Sets Stock Prices Application Monetary Policy and Stock Prices Application The Coronavirus Stock Market Crash of 2020 7.3 The Theory of Rational Expectations Formal Statement of the Theory Rationale Behind the Theory Implications of the Theory 7.4 The Efficient Market Hypothesis: Rational Expectations in Financial Markets Rationale Behind the Hypothesis Random-Walk Behavior of Stock Prices Global Should Foreign Exchange Rates Follow a Random Walk? Application Practical Guide to Investing in the Stock Market How Valuable Are Reports Published by Investment Advisers? Should You Be Skeptical of Hot Tips? FYI Should You Hire an Ape as Your Investment Adviser? Do Stock Prices Always Rise When There Is Good News? Efficient Market Prescription for the Investor 7.5 Why the Efficient Market Hypothesis Does Not Imply That Financial Markets Are Efficient Application What Do Stock Market Crashes Tell Us About the Efficient Market Hypothesis and the Efficiency of Financial Markets? 7.6 Behavioral Finance Summary Key Terms Questions Applied Problems Data Analysis Problems Part 3: Financial Institutions Chapter 8: An Economic Analysis of Financial Structure 8.1 Basic Facts About Financial Structure Throughout The World 8.2 Transaction Costs How Transaction Costs Influence Financial Structure How Financial Intermediaries Reduce Transaction Costs 8.3 Asymmetric Information: Adverse Selection and Moral Hazard 8.4 The Lemons Problem: How Adverse Selection Influences Financial Structure Lemons in the Stock and Bond Markets Tools to Help Solve Adverse Selection Problems FYI The Enron Implosion 8.5 How Moral Hazard Affects the Choice Between Debt and Equity Contracts Moral Hazard in Equity Contracts: The Principal–Agent Problem Tools to Help Solve the Principal–Agent Problem 8.6 How Moral Hazard Influences Financial Structure in Debt Markets Tools to Help Solve Moral Hazard in Debt Contracts Summary Application Financial Development and Economic Growth FYI The Tyranny of Collateral Application Is China a Counterexample to the Importance of Financial Development? Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 9: Banking and the Management of Financial Institutions 9.1 The Bank Balance Sheet Liabilities Assets 9.2 Basic Banking 9.3 General Principles of Bank Management Liquidity Management and the Role of Reserves Asset Management Liability Management Capital Adequacy Management Application Strategies for Managing Bank Capital Application How a Capital Crunch Caused a Credit Crunch During the Global Financial Crisis 9.4 Managing Credit Risk Screening and Monitoring Long-Term Customer Relationships Loan Commitments Collateral and Compensating Balances Credit Rationing 9.5 Managing Interest-Rate Risk Gap and Duration Analysis Application Strategies for Managing Interest-Rate Risk 9.6 Off-Balance-Sheet Activities Loan Sales Generation of Fee Income Trading Activities and Risk Management Techniques Global Barings, Daiwa, Sumitomo, Société Générale, and JP Morgan Chase: Rogue Traders and the Principal–Agent Problem Summary Key Terms Questions Applied Problems Data Analysis Problem Chapter 10: Economic Analysis of Financial Regulation 10.1 Asymmetric Information as a Rationale for Financial Regulation Government Safety Net Global The Spread of Government Deposit Insurance Throughout the World: Is This a Good Thing? Drawbacks of the Government Safety Net 10.2 Types of Financial Regulation Restrictions on Asset Holdings Capital Requirements Global Where Is the Basel Accord Heading After the Global Financial Crisis? Prompt Corrective Action Financial Supervision: Chartering and Examination Assessment of Risk Management Disclosure Requirements Consumer Protection Restrictions on Competition Summary Global International Financial Regulation Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 11: Banking Industry: Structure and Competition 11.1 Historical Development of the Banking System Multiple Regulatory Agencies 11.2 Financial Innovation and the Growth of the “Shadow Banking System” Responses to Changes in Demand Conditions: Interest-Rate Volatility Responses to Changes in Supply Conditions: Information Technology Securitization and the Shadow Banking System Avoidance of Existing Regulations FYI Bruce Bent and the Money Market Mutual Fund Panic of 2008 Financial Innovation and the Decline of Traditional Banking 11.3 Structure of the U.S. Commercial Banking Industry Restrictions on Branching Response to Branching Restrictions 11.4 Bank Consolidation and Nationwide Banking The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 What Will the Structure of the U.S. Banking Industry Look Like in the Future? Global Comparison of Banking Structure in the United States and Abroad Are Bank Consolidation and Nationwide Banking Good Things? 11.5 Separation of Banking and Other Financial Service Industries Erosion of Glass-Steagall The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repeal of Glass-Steagall Implications for Financial Consolidation Separation of Banking and Other Financial Services Industries Throughout the World FYI The Global Financial Crisis and the Demise of Large, Free-Standing Investment Banks 11.6 Thrift Industry: Regulation and Structure Savings and Loan Associations Mutual Savings Banks Credit Unions 11.7 International Banking Eurodollar Market Global Ironic Birth of the Eurodollar Market Structure of U.S. Banking Overseas Foreign Banks in the United States Summary Key Terms Questions Data Analysis Problems Chapter 12: Financial Crises in Advanced Economies Global The European Sovereign Debt Crisis 12.1 What is a Financial Crisis? 12.2 Dynamics of Financial Crises Stage One: Initial Phase Stage Two: Banking Crisis Stage Three: Debt Deflation Application The Mother of All Financial Crises: The Great Depression The U.S. Stock Market Crash Worldwide Decline in Asset Prices Bank Failures Economic Contraction and Debt Deflation 12.3 The Global Financial Crisis of 2007–2009 Causes of the 2007–2009 Financial Crisis FYI Collateralized Debt Obligations (CDOs) and Credit Default Swaps Effects of the 2007–2009 Financial Crisis Inside the Fed Was the Fed to Blame for the Housing Price Bubble? Height of the 2007–2009 Financial Crisis Application Could the Coronavirus Pandemic Have Led to a Financial Crisis? 12.4 Government Intervention and the Recovery Short-Term Responses and Recovery Global Latvia’s Different and Controversial Response: Expansionary Contraction 12.5 Stabilizing the Global Financial System: Long-Term Responses Global Financial Regulatory Framework Policy Areas at the National Level FYI The LIBOR Scandal 12.6 Future Regulations and Policy Areas at the International Level Bilateral and Multilateral Supervisory Cooperation Collective Supervisory Cooperation Collectively Coordinated Macroeconomic Stability Plans Self-Discipline Summary Key Terms Questions Data Analysis Problems Chapter 13: Financial Crises in Emerging Market Economies 13.1 Dynamics of Financial Crises in Emerging Market Economies Stage One: Initial Phase Stage Two: Currency Crises Stage Three: Full-Fledged Financial Crisis Application Crisis in South Korea, 1997–1998 Financial Liberalization and Globalization Mismanaged Perversion of the Financial Liberalization and Globalization Process: Chaebols and the South Korean Crisis Stock Market Decline and Failure of Firms Increase Uncertainty Adverse Selection and Moral Hazard Problems Worsen and the Economy Contracts Currency Crisis Ensues Final Stage: Currency Crisis Triggers Full-Fledged Financial Crisis Recovery Commences Global China and the “Noncrisis” in 1997–1998 Application The Argentine Financial Crisis, 2001–2002 Severe Fiscal Imbalances Adverse Selection and Moral Hazard Problems Worsen Bank Panic Begins Currency Crisis Ensues Currency Crisis Triggers Full-Fledged Financial Crisis Recovery Begins Global When an Advanced Economy Is Like an Emerging Market Economy: The Icelandic Financial Crisis of 2008 13.2 Preventing Emerging Market Financial Crises Beef Up Prudential Regulation and Supervision of Banks Encourage Disclosure and Market-Based Discipline Limit Currency Mismatch Sequence Financial Liberalization Summary Key Terms Questions Data Analysis Problems Part 4: Central Banking and the Conduct of Monetary Policy Chapter 14: Central Banks 14.1 Origins of the Central Banking System Global Who Should Own Central Banks? 14.2 Variations in the Functions and Structures of Central Banks The European Central Bank, the Euro System, and the European System of Central Banks Decision-making Bodies of the ECB How Monetary Policy Is Conducted within the ECB Global The Importance of the Bundesbank within the ECB Global Are Non-Euro Central Banks Constrained by Membership of the EU? The Federal Reserve System Difference between the ECB and the Fed The Bank of England Global Brexit and the BoE 14.3 Structure of Central Banks of Larger Economies The Bank of Canada The Bank of Japan The People’s Bank of China 14.4 Structure and Independence of Central Banks of Emerging Market Economies 14.5 Central Banks Independence The Case for Independence The Case against Independence The Trend toward Greater Independence Summary Key Terms Questions Data Analysis Problems Chapter 15: The Money Supply Process 15.1 Three Players in the Money Supply Process 15.2 The Fed’s Balance Sheet Liabilities Assets 15.3 Control of the Monetary Base Federal Reserve Open Market Operations Shifts from Deposits into Currency Loans to Financial Institutions Other Factors That Affect the Monetary Base Overview of the Fed’s Ability to Control the Monetary Base 15.4 Multiple Deposit Creation: A Simple Model Deposit Creation: The Single Bank Deposit Creation: The Banking System Deriving the Formula for Multiple Deposit Creation Critique of the Simple Model 15.5 Factors that Determine the Money Supply Changes in the Nonborrowed Monetary Base, MBn Changes in Borrowed Reserves, BR, from the Fed Changes in the Required Reserve Ratio, rr Changes in Excess Reserves Changes in Currency Holdings 15.6 Overview of the Money Supply Process 15.7 The Money Multiplier Deriving the Money Multiplier Intuition Behind the Money Multiplier Money Supply Response to Changes in the Factors Application Quantitative Easing and the Money Supply During the Global Financial and the Coronavirus Crises Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 16: Tools of Monetary Policy 16.1 The Market for Reserves and the Federal Funds Rate Demand and Supply in the Market for Reserves How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate Application How the Federal Reserve’s Operating Procedures Limit Fluctuations in the Federal Funds Rate 16.2 Conventional Monetary Policy Tools Open Market Operations Inside the Fed A Day at the Trading Desk Discount Policy and the Lender of Last Resort Inside the Fed Using Discount Policy to Prevent a Financial Panic Reserve Requirements Interest on Excess Reserves 16.3 Nonconventional Monetary Policy Tools and Quantitative Easing in the Wake of the Global Financial Crisis and the Coronavirus Pandemic Liquidity Provision Large-Scale Asset Purchases Inside the Fed Fed Lending Facilities During the Global Financial and Coronavirus Crises Quantitative Easing Versus Credit Easing Forward Guidance Negative Interest Rates on Banks’ Deposits 16.4 Monetary Policy Tools of the European Central Bank Open Market Operations Lending to Banks Interest on Excess Reserves Reserve Requirements Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 17: The Conduct of Monetary Policy: Strategy and Tactics 17.1 The Price Stability Goal and the Nominal Anchor The Role of a Nominal Anchor The Time-Inconsistency Problem 17.2 Other Goals of Monetary Policy High Employment and Output Stability Economic Growth Stability of Financial Markets Interest-Rate Stability Stability in Foreign Exchange Markets 17.3 Should Price Stability be the Primary Goal of Monetary Policy? Hierarchical Versus Dual Mandates Price Stability as the Primary, Long-Run Goal of Monetary Policy 17.4 Inflation Targeting Inflation Targeting in New Zealand, Canada, and the United Kingdom Advantages of Inflation Targeting Disadvantages of Inflation Targeting 17.5 The Evolution of the Federal Reserve’s Monetary Policy Strategy The Fed’s “Just Do It” Monetary Policy Strategy The Long Road to Inflation Targeting Inside the Fed Ben Bernanke’s Advocacy of Inflation Targeting Global The European Central Bank’s Monetary Policy Strategy 17.6 Lessons for Monetary Policy Strategy from the Global Financial Crisis Implications for Inflation Targeting Inside the Fed The Fed’s New Monetary Policy Strategy: Average Inflation Targeting 17.7 Should Central Banks Try to Stop Asset-Price Bubbles? Two Types of Asset-Price Bubbles The Debate over Whether Central Banks Should Try to Pop Bubbles 17.8 Tactics: Choosing the Policy Instrument Criteria for Choosing the Policy Instrument 17.9 Tactics: The Taylor Rule Inside the Fed The Fed’s Use of the Taylor Rule Summary Key Terms Questions Applied Problems Data Analysis Problems Part 5: International Finance and Monetary Policy Chapter 18: The Foreign Exchange Market 18.1 Foreign Exchange Market Following the Financial News Foreign Exchange Rates What Are Foreign Exchange Rates? Why Are Exchange Rates Important? How Is Foreign Exchange Traded? 18.2 Exchange Rates in the Long Run Theory of Purchasing Power Parity Application Burgernomics: Big Macs and PPP Factors That Affect Exchange Rates in the Long Run 18.3 Exchange Rates in the Short Run: A Supply and Demand Analysis Supply Curve for Domestic Assets Demand Curve for Domestic Assets Equilibrium in the Foreign Exchange Market 18.4 Explaining Changes in Exchange Rates Shifts in the Demand for Domestic Assets Recap: Factors That Change the Exchange Rate Application Effects of Changes in Interest Rates on the Equilibrium Exchange Rate Application The Global Financial Crisis and the Dollar Application Brexit and the British Pound Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 19: The International Financial System 19.1 Intervention in the Foreign Exchange Market Foreign Exchange Intervention and the Money Supply Global Variation in Central Banks’ Activism and Method of Intervention on Foreign Exchange Markets Unsterilized Intervention Sterilized Intervention 19.2 Balance of Payments Current Account Financial Account Global Should We Worry About the Large and Recurrent Trade Deficit? 19.3 Exchange Rate Regimes in the International Financial System Gold Standard The Bretton Woods System How a Fixed Exchange Rate Regime Works Speculative Attacks Application The Foreign Exchange Crisis of September 1992 The Policy Trilemma Application How Did China Accumulate $4 Trillion of International Reserves? Monetary Unions Managed Float Global Will the Euro Survive? 19.4 Capital Controls Controls on Capital Outflows Controls on Capital Inflows 19.5 The Role of the IMF Should the IMF Act as an International Lender of Last Resort? 19.6 International Considerations and Monetary Policy Direct Effects of the Foreign Exchange Market on Monetary Policy Exchange Rate Considerations 19.7 To PEG or Not to Peg: Exchange-Rate Targeting as an Alternative Monetary Policy Strategy Advantages of Exchange-Rate Targeting Disadvantages of Exchange-Rate Targeting When Is Exchange-Rate Targeting Desirable for Industrialized Countries? When Is Exchange-Rate Targeting Desirable for Emerging Market Countries? Currency Boards Global Argentina’s Currency Board Dollarization Summary Key Terms Questions Applied Problems Data Analysis Problems Part 6: Monetary Theory Chapter 20: Quantity Theory, Inflation, and the Demand for Money 20.1 Quantity Theory of Money Velocity of Money and Equation of Exchange From the Equation of Exchange to the Quantity Theory of Money Quantity Theory and the Price Level Quantity Theory and Inflation Application Testing the Quantity Theory of Money 20.2 Budget Deficits and Inflation Government Budget Constraint FYI Modern Monetary Theory Hyperinflation Application The Zimbabwean Hyperinflation 20.3 Keynesian Theories of Money Demand Transactions Motive Precautionary Motive Speculative Motive Putting the Three Motives Together 20.4 Portfolio Theories of Money Demand Theory of Portfolio Choice and Keynesian Liquidity Preference Other Factors That Affect the Demand for Money Summary 20.5 Empirical Evidence on the Demand for Money Interest Rates and Money Demand Stability of Money Demand Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 21: The IS Curve 21.1 Planned Expenditure and Aggregate Demand 21.2 The Components of Aggregate Demand Consumption Expenditure FYI Meaning of the Word Investment Planned Investment Spending Government Purchases and Taxes Net Exports 21.3 Goods Market Equilibrium Solving for Goods Market Equilibrium Deriving the IS Curve 21.4 Understanding the IS Curve What the IS Curve Tells Us: Intuition What the IS Curve Tells Us: Numerical Example Why the Economy Heads Toward Equilibrium 21.5 Factors that Shift the IS Curve Changes in Government Purchases Application The Vietnam War Buildup, 1964–1969 Changes in Taxes Application The Fiscal Stimulus Package of 2009 Changes in Autonomous Spending Changes in Financial Frictions Summary of Factors That Shift the IS Curve Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 22: The Monetary Policy and Aggregate Demand Curves 22.1 The Federal Reserve and Monetary Policy 22.2 The Monetary Policy Curve Why the Monetary Policy Curve Has an Upward Slope Shifts in the MP Curve Movements Along Versus Shifts in the MP Curve Application Movements Along the MP Curve: The Rise in the Federal Funds Rate Target, 2004–2006 and 2015–2019 Application Shift in the MP Curve: Autonomous Monetary Easing During the Global Financial and Coronavirus Crises 22.3 The Aggregate Demand Curve Deriving the Aggregate Demand Curve Graphically FYI Deriving the Aggregate Demand Curve Algebraically Factors That Shift the Aggregate Demand Curve Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 23: Aggregate Demand and Supply Analysis 23.1 Business Cycles and Inflation Business Cycles Inflation 23.2 Aggregate Demand Components of Aggregate Demand Following the Financial News Aggregate Output, Unemployment, and Inflation Deriving the Aggregate Demand Curve Factors That Shift the Aggregate Demand Curve FYI What Does Autonomous Mean? 23.3 Aggregate Supply Long-Run Aggregate Supply Curve Short-Run Aggregate Supply Curve Price Stickiness and the Short-Run Aggregate Supply Curve 23.4 Shifts in the Aggregate Supply Curves Shifts in the Long-Run Aggregate Supply Curve Shifts in the Short-Run Aggregate Supply Curve 23.5 Equilibrium in Aggregate Demand and Supply Analysis Short-Run Equilibrium Aggregate Demand and Supply Analysis Using an Aggregate Output Index How the Short-Run Equilibrium Moves to the Long-Run Equilibrium over Time Self-Correcting Mechanism 23.6 Changes in Equilibrium: Aggregate Demand Shocks Application The Volcker Disinflation, 1980–1986 23.7 Changes in Equilibrium: Aggregate Supply (Inflation) Shocks Application Negative Supply Shocks, 1973–1975 and 1978–1980 23.8 Conclusions from Aggregate Demand and Supply Analysis Application AD/AS Analysis of the Great Recession of 2007–2009 Application An AD/AS Analysis of the Covid-19 Recession Summary Key Terms Questions Applied Problems Data Analysis Problems Appendix to Chapter 23: The Phillips Curve and the Short-Run Aggregate Supply Curve 23.A1 The Phillips Curve Phillips Curve Analysis in the 1960s The Friedman-Phelps Phillips Curve Analysis FYI The Phillips Curve Trade-Off and Macroeconomic Policy in the 1960s The Phillips Curve After the 1960s The Modern Phillips Curve The Modern Phillips Curve with Adaptive (Backward-Looking) Expectations 23.A2 The Short-Run Aggregate Supply Curve Chapter 24: Monetary Policy Theory 24.1 Response of Monetary Policy to Shocks Response to an Aggregate Demand Shock Response to a Supply Shock The Bottom Line: The Relationship Between Stabilizing Inflation and Stabilizing Economic Activity 24.2 How Actively Should Policymakers Try to Stabilize Economic Activity? Lags and Policy Implementation FYI The Activist/Nonactivist Debate over the Obama Fiscal Stimulus Package 24.3 Inflation: Always and Everywhere a Monetary Phenomenon 24.4 Causes of Inflationary Monetary Policy High Employment Targets and Inflation Application The Great Inflation 24.5 Monetary Policy at the Effective Lower Bound Deriving the Aggregate Demand Curve with the Effective Lower Bound The Disappearance of the Self-Correcting Mechanism at the Effective Lower Bound Application Nonconventional Monetary Policy and Quantitative Easing Liquidity Provision Asset Purchases and Quantitative Easing Management of Expectations Application Abenomics and the Shift in Japanese Monetary Policy in 2013 Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 25: The Role of Expectations in Monetary Policy 25.1 Lucas Critique of Policy Evaluation Econometric Policy Evaluation Application The Term Structure of Interest Rates 25.2 Policy Conduct: Rules or Discretion? Discretion and the Time-Inconsistency Problem Types of Rules The Case for Rules FYI The Political Business Cycle and Richard Nixon The Case for Discretion Constrained Discretion Global The Demise of Monetary Targeting in Switzerland 25.3 The Role of Credibility and a Nominal Anchor Benefits of a Credible Nominal Anchor Credibility and Aggregate Demand Shocks Credibility and Aggregate Supply Shocks Application A Tale of Three Oil Price Shocks Credibility and Anti-Inflation Policy Global Ending the Bolivian Hyperinflation: A Successful Anti-Inflation Program 25.4 Approaches to Establishing Central Bank Credibility Nominal GDP Targeting Appoint “Conservative” Central Bankers Inside the Fed The Appointment of Paul Volcker, Anti-Inflation Hawk Summary Key Terms Questions Applied Problems Data Analysis Problems Chapter 26: Transmission Mechanisms of Monetary Policy 26.1 Transmission Mechanisms of Monetary Policy Traditional Interest-Rate Channels Other Asset Price Channels Credit View FYI Consumers’ Balance Sheets and the Great Depression Why Are Credit Channels Likely to Be Important? Application The Great Recession 26.2 Lessons for Monetary Policy Application Applying the Monetary Policy Lessons to Japan’s Two Lost Decades Summary Key Terms Questions Applied Problems Data Analysis Problems Glossary Index A B C D E F G H I J K L M N O P Q R S T U V W Y Z
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