Knowledge that Transforms

This paper extends, corrects, and unifies earlier statements concerning the social value of public information as well as the no‐trading conditions in pure exchange. Sufficient and necessary conditions are provided for both the single‐period and two‐period cases in a postsignal trading model. The social value of information is shown to be closely linked to the allocational efficiency of the market, the degree of homogeneity of prior beliefs, and of information structures, the time‐additivity of preferences, and the efficiency of endowments. We conclude that the case in favor of public information is much stronger than previously suggested.

Part I: The Financial System. Chapter 1. An Overview of Financial Markets and Institutions. Chapter 2. The Federal Reserve and Its Powers. Chapter 3. The Fed and Interest rates. Part II: How Interest rates Are Determined. Chapter 4. The Level of Interest Rates. Chapter 5. Bond Prices and Interest Rate Risk. Chapter 6. The Structure of Interest Rates. Part III Financial Markets. Chapter 7. Money Markets. Chapter 8. Bond Markets. Chapter 9. Mortgage Markets. Chapter 10. Equity Markets. Chapter 11. Derivatives Markets. Chapter 12. International Markets. Part IV: Commercial Banking. Chapter 13. Commercial Bank Operations. Chapter 14. Bank Management and Profitability. Chapter 15. International Banking. Chapter 16. Regulation of Financial Institutions. Part V: Financial Institutions. Chapter 17. Thrift Institutions and Finance Companies. Chapter 18. Insurance Companies and Pension Funds. Chapter 19. Investment Banking. Chapter 20. Investment Companies. Glossary. Credits and Acknowledgments. Index.