Part Two: Macroeconomic Policy and the Financial Markets’ Transmission Mechanism
Part Two: Macroeconomic Policy and the Financial Markets’ Transmission Mechanism

Summary/Abstract: - Monetary Policy Models – Rules vs. Discretion - The Optimal State-Contingent Rule - The Non-contingent Rule - Pure Discretion - The Conservative Central Banker Model - Central Bank Procedures – Required Reserves and Inter-bank Markets - Domestic Financial Market Structure and Central Bank Credit Funds - The Financial Market T ransmission Mechanism –MonetaryPolicy and Financial Asset Prices - A model of the impact of financial asset prices on monetary policy optimization - The role of securities prices in the money supply transmission mechanism - Exchange Rate Policy under Deregulation and Free Capital Flows -The impact of the major world currencies on developing countries’ exchange rates in the Nineties - Problems of exchange rate system selection - The Interaction of Capital Mobility, Exchange Rate Policy, and Fiscal Policy - Capital mobility under a fixed exchange rate - The fiscal policy of small open economies with perfect capital mobility

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