Part 1 Introduction: main themes bounded rationality, opportunism and structure of markets rational expectations the equilibrium model real and financial sectors of the economy. Part 2 Two-period finance economy - motivation and summary: characteristics of the finance economy contingent market equilibrium financial market equilibrium absence of arbitrage no-arbitrage equilibrium a basic property of incomplete markets constrained pareto optimality abstract approach - adjoint equations. Part 3 Two-period security pricing - motivation and summary: inner product, differential and gradient valuation of income streams representative agent analysis capital asset pricing model (CAPM). Part 4 Stochastic financial economy - motivation and summary: event-tree commodity space stochastic exchange economy stochastic financial markets absence of arbitrage complete and incomplete markets no-arbitrage equilibrium example of non-existence existence and optimality. Part 5 Information efficiency of security prices - motivation and summary: conditional expectation and martingale efficient markets under risk neutrality efficient markets with risk aversion. Part 6 Production in a finance economy - motivation and summary: characteristics of production economy sole proprietorships partnerships corporations. Part 7 Monetary economy - motivation and summary: real and nominal contracts monetary equilibrium non-neutrality of monetary policy optimal monetary policy indexing contracts.
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