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We consider a cash-in-advance economy under uncertainty in which monetary policy sets either short-term nominal interest rates or money supplies. We show that both the initial price level and the distribution of the inflation rate up to its expectation are indeterminate, regardless of the degree of competition or the flexibility of prices in commodity markets. This indeterminacy is not related to the stability of a deterministic steady state.

Monetary and fiscal policy do not determine the stochastic path of prices: in the absence of financial policy, there remains indeterminacy indexed by an arbitrary probability measure over the set of states of the world. With an interest rate policy, and only if the asset market is complete, indeterminacy is nominal: it affects prices, but not the allocation of resources at equilibrium; with a money-supply policy, the indeterminacy is real. Portfolio policy sets the portfolio of assets that the monetary authority employs in open market operations; it determines the equilibrium if the policy is non-Ricardian, but not otherwise; financial rate policy, which sets the rates of return of elementary securities, the contingent price of revenue at each dateevent determines equilibrium allocations and prices. long-lived nominally riskless assets can substitute for assets with contingent payoffs; financial policy, then, sets the maturity structure of debt or the yield curve.

There are many alleged culprits for the bank runs of 2008 and their devastating economic fallout. But proprietary information and leverage top our list. Claims of proprietary information forced financial markets to operate on trust, while providing the perfect breeding ground for fraud. And leverage permitted creditors to run at the first whiff of fraud, leveling one financial giant after another. Limited Purpose Banking (LPB), presented here, is a financial reform that sharply curtails proprietary information and eliminates leverage and, thus, the possibility of financial collapse. LPB's adoption is supported by our simple model showing how fraud can destroy finance.

In the area of dynamic economics, David Cass's work has spawned a number of important lines of research, including the study of dynamic general equilibrium theory, the concept of sunspot equilibria, and general equilibrium theory when markets are incomplete. Based on these contributions, this volume contains new developments in the field, written by Cass's students and co-authors.