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Economics and Finance

Economics and Finance

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Edited by Paul H. Schultz

The Dodd–Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010 largely in response to the financial crisis, created the Financial Stability Oversight Council and the Consumer Financial Protection Bureau; among other provisions, it limits proprietary trading by banks, changes the way swaps are traded, and curtails the use of credit ratings. The effects of Dodd–Frank remain a matter for speculation; more than half of the regulatory rulemaking called for in the bill has yet to be completed.

This manual includes solutions to the odd-numbered exercises in Economic Dynamics in Discrete Time. Some exercises are purely analytical, while others require numerical methods. Computer codes are provided for most problems. Many exercises ask the reader to apply the methods learned in a chapter to solve related problems, but some exercises ask the reader to complete missing steps in the proof of a theorem or in the solution of an example in the book.

Useful Economics for the World Economy

As the global economic crisis continues to cause damage, some policy makers have called for a more Keynesian approach to current economic problems. In this book, the economists Peter Temin and David Vines provide an accessible introduction to Keynesian ideas that connects Keynes’s insights to today’s global economy and offers readers a way to understand current policy debates.

This book offers a unified, comprehensive, and up-to-date treatment of analytical and numerical tools for solving dynamic economic problems. The focus is on introducing recursive methods—an important part of every economist’s set of tools—and readers will learn to apply recursive methods to a variety of dynamic economic problems. The book is notable for its combination of theoretical foundations and numerical methods. Each topic is first described in theoretical terms, with explicit definitions and rigorous proofs; numerical methods and computer codes to implement these methods follow.

Basics and Extensions

Spreadsheets are used daily by millions of people for tasks that range from organizing a list of addresses to carrying out complex economic simulations. Spreadsheet programs are easy to learn and convenient to use because they have a clear visual model and a simple efficient underlying computational model. Yet although the basic spreadsheet model could be extended, improved, or otherwise experimented with in many ways, there is no coherently designed, reasonably efficient open source spreadsheet implementation that is a suitable platform for such experiments.

Lessons for Central Bankers

The recent financial crisis shook not only the global economy but also conventional wisdom about economic policy. After the collapse of Lehman Brothers in September 2008, policy makers reversed course and acted on an unprecedented scale. The policy response was remarkable both for its magnitude and for the variety of measures undertaken. This book examines both the major role central banks played in the crisis and the role they might play in preventing or preparing for future crises.

A Long View

It is not so easy to take the long view of socioeconomic history when you are participating in a revolution. For that reason, Russian economist Yegor Gaidar put aside an early version of this work to take up a series of government positions--as Minister of Finance and as Boris Yeltsin’s acting Prime Minister--in the early 1990s. In government, Gaidar shepherded Russia through its transition to a market economy after years of socialism. Once out of government, Gaidar turned again to his consideration of Russia’s economic history and long-term economic and political challenges.

Options and Games

Corporate managers who face both strategic uncertainty and market uncertainty confront a classic trade-off between commitment and flexibility. They can stake a claim by making a large capital investment today, influencing their rivals’ behavior, or they can take a “wait and see” approach to avoid adverse market consequences tomorrow.

Too Much or Too Little?

In assigning blame for the recent economic crisis, many have pointed to the proliferation of new, complex financial products--mortgage securitization in particular--as being at the heart of the meltdown. The prominent economists from academia, policy institutions, and financial practice who contribute to this book, however, take a more nuanced view of financial innovation. They argue that it was not too much innovation but too little innovation--and the lack of balance between debt-related products and asset-related products--that lies behind the crisis.

Leading Economists Reassess Economic Policy

In 2011, the International Monetary Fund invited prominent economists and economic policymakers to consider the brave new world of the post-crisis global economy. The result is a book that captures the state of macroeconomic thinking at a transformational moment.

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