Business Cycles and Equilibrium, Updated Edition

An updated look at what Fischer Black's ideas on business cycles and equilibrium mean today Throughout his career, Fischer Black described a view of business fluctuations based on the idea that a well-developed economy will be continually in equilibrium. In the essays that constitute this book, which is one of only two books Black ever wrote, he explores this idea thoroughly and reaches some surprising conclusions. With the newfound popularity of quantitative finance and risk management, the work of Fischer Black has garnered much attention. Business Cycles and Equilibrium-with its theory that economic and financial markets are in a continual equilibrium-is one of his books that still rings true today, given the current economic crisis. This Updated Edition clearly presents Black's classic theory on business cycles and the concept of equilibrium, and contains a new introduction by the person who knows Black best: Perry Mehrling, author of Fischer Black and the Revolutionary Idea of Finance (Wiley). Mehrling goes inside Black's life to uncover what was occurring during the time Black wrote Business Cycles and Equilibrium, while also shedding light on what Black would make of today's financial and economic meltdown and how he would best advise to move forward. The essays within this book reach some interesting conclusions concerning the role of equilibrium in a developed economy Warns about the use and abuse of modeling Explains the risky business of risk in a straightforward and accessible style Contains chapters dedicated to "e;the effects of uncontrolled banking,"e; "e;the trouble with econometric models,"e; and "e;the effects of noise on investing"e; Includes commentary on Black's life and work at the time Business Cycles and Equilibrium was written as well as insight as to what Black would make of the current financial meltdown Engaging and informative, the Updated Edition of Business Cycles and Equilibrium will give you a better understanding of what is really going on during these uncertain and volatile financial times.

An updated look at what Fischer Black's ideas on business cyclesand equilibrium mean todayThroughout his career, Fischer Black described a view ofbusiness fluctuations based on the idea that a well-developedeconomy will be continually in equilibrium. In the essays thatconstitute this book, which is one of only two books Black everwrote, he explores this idea thoroughly and reaches some surprisingconclusions.With the newfound popularity of quantitative finance and riskmanagement, the work of Fischer Black has garnered much attention.Business Cycles and Equilibrium-with its theory thateconomic and financial markets are in a continual equilibrium-isone of his books that still rings true today, given the currenteconomic crisis. This Updated Edition clearly presentsBlack's classic theory on business cycles and the concept ofequilibrium, and contains a new introduction by the person whoknows Black best: Perry Mehrling, author of Fischer Black andthe Revolutionary Idea of Finance (Wiley). Mehrling goes insideBlack's life to uncover what was occurring during the time Blackwrote Business Cycles and Equilibrium, while also sheddinglight on what Black would make of today's financial and economicmeltdown and how he would best advise to move forward.The essays within this book reach some interesting conclusionsconcerning the role of equilibrium in a developed economy* Warns about the use and abuse of modeling* Explains the risky business of risk in a straightforward andaccessible style* Contains chapters dedicated to "the effects of uncontrolledbanking," "the trouble with econometric models," and "the effectsof noise on investing"* Includes commentary on Black's life and work at the timeBusiness Cycles and Equilibrium was written as well asinsight as to what Black would make of the current financialmeltdownEngaging and informative, the Updated Edition ofBusiness Cycles and Equilibrium will give you a betterunderstanding of what is really going on during these uncertain andvolatile financial times.

Foreword vIntroduction xxiChapter 1: Banking and Interest Rates in a World Without Money: The Effects of Uncontrolled Banking 1Chapter 2: Active and Passive Monetary Policy in a Neoclassical Model 23Chapter 3: Rational Economic Behavior and the Balance of Payments 43Chapter 4: Uniqueness of the Price Level in Monetary Growth Models with Rational Expectations 65Chapter 5: Purchasing Power Parity in an Equilibrium Model 81Chapter 6: Ups and Downs in Human Capital and Business 85Chapter 7: How Passive Monetary Policy Might Work 91Chapter 8: What a Non-Monetarist Thinks 99Chapter 9: Global Monetarism in a World of National Currencies 107Chapter 10: The ABCs of Business Cycles 117Chapter 11: A Gold Standard with Double Feedback and Near Zero Reserves 129Chapter 12: The Trouble with Econometric Models 135Chapter 13: General Equilibrium and Business Cycles 153Chapter 14: Noise 169Index 191