The Theory of Money and Financial Institutions: Volume 1 by Martin Shubik

By Martin Shubik

This can be the 1st quantity in a three-volume exposition of Martin Shubik's imaginative and prescient of "mathematical institutional economics"—a time period he coined in 1959 to explain the theoretical underpinnings wanted for the development of an monetary dynamics. The target is to advance a process-oriented idea of cash and fiscal associations that reconciles micro- and macroeconomics, utilizing as a major device the speculation of video games in strategic and large shape. The strategy comprises a look for minimum monetary associations that seem as a logical, technological, and institutional necessity, as a part of the "rules of the game." funds and monetary associations are assumed to be the elemental parts of the community that transmits the sociopolitical imperatives to the economic system. quantity 1 offers with a one-period method of monetary alternate with cash, debt, and financial ruin. quantity 2 explores the recent fiscal gains that come up after we reflect on multi-period finite and countless horizon economies. quantity three will ponder the explicit function of monetary associations and executive, and formulate the commercial monetary keep an eye on challenge linking micro- and macroeconomics.

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4 Decpossible 2009 03:21:59 and/or syndication) Wed, and 16 the use of primary dealers. In return for meeting the obligations for being designated a primary dealer, governments 14 (c) The International Bank for Reconstruction and Development / The World Bank Developing a Government Bond Market: An Overview grant primary dealers some privileges, often including exclusive access to the auctions. Auctions are the common method for the sale of government securities in most domestic markets, following the pattern of Treasury bill auctions and requiring a number of independent bidders.

For such markets, increased trading frequency would be warranted, and at an appropriate time the market could move to continuous trading. Automated trading systems are increasingly the preferred venue for most countries, with their costs three to four times lower than those of traditional exchanges using a floor and open-outcry method. These developments increasingly give official issuers the capacity to sell and distribute securities directly to final wholesale and retail investors. Given the rapid pace of technology in this area,17 freedom of entry to proprietary providers of trading systems that are organized as corporations must be ensured.

These obligations can substitute for Treasury bills where there is not yet a working Treasury bill auction. Central bank securities can be traded in the market, helping to facilitate development of a secondary market. Where there is a Treasury bill market, however, central bank bills may fragment demand, especially if Treasury bills and central bank bills carry similar maturities. Coordination is required to avoid conflicts between the government’s debt/cash management and the central bank’s open market operations.

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