A workshop of the European Science Foundation Network in Financial Markets on `Financial Markets and Real Economic Behaviour', hosted by the Centro de Estudios Monetarios e Financieros (CEMFI), Banco de España, was held in Madrid on 13/14 December. The workshop was organized by Jean-Pierre Danthine (Université de Lausanne and CEPR), Marco Pagano (Università Bocconi, Milano, and CEPR), and Rafael Repullo (CEMFI and CEPR). The following papers were presented:

`Illustrating the Asset and the Transaction Theories of Money', Javier Díaz-Giménez (Universidad Carlos III, Madrid)

`The Role of Credit Market Imperfections in the Monetary Transmission Mechanism: Arguments and Evidence', Mark Gertler (New York University) and Simon Gilchrist (Federal Reserve Board, Washington DC)

`Non-linearities in Asset Prices and Infrequent Noise Trading', Pierluigi Balduzzi (New York University), Giuseppe Bertola (Princeton University and CEPR) and Silverio Foresi (New York University)

`Private Information and the Design of Securities', Gabrielle Demange (DELTA, Paris) and Guy Laroque (INSEE, Paris)

`The UK Consumption Boom of the Late 1980s: Aggregate Implications of Microeconomic Evidence', Orazio Attanasio (Stanford University and CEPR) and Guglielmo Weber (University College, London, Institute for Fiscal Studies, London, and IGIER, Milano)

`Investment Incentives in Endogenously Growing Economies', Fernando Restoy (Banco de España) and Michael Rockinger (HEC, Jouy-en-Josas)

`Equilibrium Asset Prices and Savings of Heterogeneous Agents in the Presence of Incomplete Markets and Portfolio Constraints', Albert Marcet (Universitat Pompeu Fabra, Barcelona, and CEPR) and Ken Singleton (Stanford University)

`Stock Markets and Development', Raymond Atje and Boyan Jovanovic (New York University)