The breakthrough text that closes the gap between economic theory and the day-to-day behaviour of banks and financial markets. Working from a macro framework based on the Fed's use of interest rate, Ball presents the core concepts necessary to understand the problems of the stock market and the causes of recessions and banking crises

Working from a macro framework based on the Feds use of interest rate as its major policy instrument, Ball presents the core concepts necessary to understand the problems affecting the stock market, and the causes of recessions and banking crises.  Underlying this framework are the intellectual foundations for the Feds inflation targeting using the dynamic consistency problem facing policymakers.