Economics of Financial Markets
Core modulesThis module will provide you with the basic tools of economic analysis, as well as an understanding of policy issues relevant to financial markets and the economic context within which they operate.
You will study the basic tools of microeconomic analysis and modern macroeconomic theory and policy issues up to the level of dynamic ISLM. You will also explore the interaction of the real and financial sectors of the economy emphasising the role of the yield curve and the stock market.
Topics covered include:
- Consumption and production theory and general equilibrium
- Strategic interaction
- Asymmetric information and agency problems
- The ISLM model
- Monetary and fiscal policy
- Credibility and the role of expectations
- The Yield Curve and the stock market
- Dynamic ISLM.
By the end of this module you will have:
- Analysed markets and the basis of economic decision making in strategic competitive environments
- Analysed the impact of macroeconomic policy, both monetary and fiscal, on financial markets
- Understood the importance of the yield curve in government finances and financial markets
- Understood the role of credibility and reputation in monetary policy
- Appreciated game theory concepts in strategic interactions
- Solved forward looking models with rational expectations and asset prices
- Quantified the impact of policy and news on financial markets.
