Asset prices, booms and recessions

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This book on Financial Economics explores the dynamic interplay between financial markets and economic activity. It examines various markets, including money, bonds, credit, stocks, and foreign exchange, while describing economic activity through the actions of firms, banks, households, governments, and countries. The text illustrates how economic activity influences asset prices and market volatility, which in turn impacts economic performance. Emphasizing theories, dynamic models, and empirical evidence, it includes applications related to financial instability and crises in the U.S., Latin America, Asia, and the Euro area. The current edition expands coverage of financial economics topics by updating relevant literature and offering in-depth discussions on advanced subjects such as international portfolio theory, multi-agent and evolutionary approaches, and capital asset pricing beyond traditional consumption-based models. It also addresses dynamic portfolio decisions. Overall, the book provides essential insights for researchers and practitioners in financial engineering, as well as economists, policymakers, and professionals seeking to understand economic dynamics and financial markets.