This book puts economics to work on the daily problems faced by investors, traders, speculators and brokers as they wrestle with increasingly complex financial markets. Drawing on data direct from the financial behavior of households, corporations, and governments, through to the prices of individual securities, the authors show how accessible but rigorous economics can help the players make sense of the hour-by-hour reality of the way financial markets move. Many of the twists and turns that might seem random at first sight are, they contend, rational and often predictable. But inefficiencies do exist, and the authors also demonstrate how these can become unique profit opportunities. By bringing together information on the daily workings of financial markets with the concepts and tools of economics, Houthakker and Williamson have provided a valuable resource for practitioners and students alike.

"This well-written book, while important to library collections, will probably best be used as supplemental readings for most courses in finance or financial economics....As the subject penetrates further into the liberal arts colleges, the Houthakker/Williamson approach may be more widely used. An excellent supplemental work for upper-division undergraduates and graduates."--Choice
"The Economics of Financial Markets is an outstanding book about financial markets....[IT] deserves to be a standard reference. It is an excellent choice for economists who would like to become acquainted with the economics of financial markets or for practitioners who want an overview of financial markets. Based on Houthakker's lectures in an elective, undergraduate course at Harvard for economicsmajors, it also would be useful in a Master's level course and in a course with birght, diligent undergraduates."--Journal of Economic Literature