Marcia Stigum’s *The Money Market*

by on October 26, 2008 at 8:35 am in Books | Permalink

Often people ask for me background reading about the financial crisis.  I recommend blogs first and foremost but still people wish for a brief primer.  Well, I can recommend a 1200 page primer, namely Marcia Stigum’s The Money Market, now in its fourth edition.  It provides comprehensive coverage of all the major institutions in…the money market.  When I used to teach monetary economics at the Ph.d. level, I made all of the students read this entire book (in an earlier and slightly shorter edition) and I quizzed them on every chapter.  This was considered highly unorthodox at the time and of course 1200 pages is a lot of opportunity cost.  Still, I think it was one of the better educational decisions I have made as a professor and now I view it as somewhat vindicated.  The book is not perfect but it is a very good place to start.  It is also useful as a source of reference.

1 joan October 26, 2008 at 9:19 am

A good a short primer on Credit Default Swaps is,
http://www.nytimes.com/2008/02/17/business/17swap.html?_r=3&pagewanted=1&sq=credit%20default%20swaps%20Febuary&st=cse&scp=2&adxnnlx=1224291848-xKoecHyFUSpyt17tsLhdIQ&oref=slogin
It was published on 2008/02/17 so it is not about the current problems, but a more generalize look at the market, and the danger they posed to the financial system.

2 Gareth October 26, 2008 at 10:06 am

NPR’s Planet Money are running a great series of podcasts explaining what’s happening in lay terms. http://www.npr.org/blogs/money/

There’s also a special edition of This American Life which does a great job of giving some insight at http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1263

3 Douglas Knight October 26, 2008 at 11:12 am

considered highly unorthodox

Do you deny that it was unorthodox?

4 laocoon October 26, 2008 at 12:28 pm

As a practitioner, I’ve always found Stigum’s book to be very accessible and useful. It’s well-founded and not overly theoretical. It really is the industry standard in a practical way, but adds depth of understanding. I went to business school after working in the money markets and found most professors were too theoretical, with their views being interesting but bearing no resemblance to market experience. After business school, I went back to Stigum for not just the day to day but a better understanding. Great recommendation.

5 mickslam October 26, 2008 at 4:07 pm

Tyler,

Great recommendation, thanks.

I know you read lots, but there must be a short list of “must reads” that you could put into a short list into a short list on the side of the blog. This book clearly belongs on that list. One that is different than the current reading list you have on the side.

I hate to say, but Bodie, Kane, Marcus is quite helpful from a broad finance perspective. I reference it enough.

6 Garett Jones October 28, 2008 at 1:09 am

James Hamilton had us read Stigum back in grad school at UCSD, and I’ve kept her 2nd edition ever since….Knowing the real-world institutions has big, big payoffs….

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