LEARNING OUTCOMES

The course of Economics of Financial Markets has the specific aim of providing both theoretical and technical knowledge on the working of financial markets, with specific focus on the most recent theories and the debate among the different streams of thought. Specific attention will be dedicated to the impact of monetary policies on financial markets, to the creation and propagation of expectations and to the impact that they have on the yields of financial assets and their time structure

AIMS AND LEARNING OUTCOMES

The main targets of the course are the following:

• Understanding the working of financial markets
• Understanding the effects of monetary policy on the financial markets
• Understanding the working of financial markets in the light of Behaviural Finance and other recent alternative theoretical approaches

PREREQUISITES

Undergraduate introductory courses of Macroeconomics and Microeconomics.

TEACHING METHODS

Lessons by the teacher. Seminars on a few specific topics.

Teaching methods might be subject to changes due to the epidemiological conditions and public health conditions. Please refer to Aulaweb for any updating, both for what concerns the teaching methods and the exam methods.

SYLLABUS/CONTENT

Part I: The Debate on Financial Markets Efficinecy

1. The conventional approach and its foundations.
2. Some alternative approaches and the main objections to the orthodox models.
3. Firm's investments and financial markets.

Part II:  Monetary Policy and Financial Markets

1. Central Bank, inside money, outside money and payment systems.
2. From the policy interest rate tto the markets interest rates.
3. The Transmissiom Mechanism of Monetary Policy: the Money Channel and the Crediit Channel

Part III: Introduction to Behavioural Finance

1. Anomalies in financial behaviour
2. Anomalies in the discount factor
3. Speculative bubbles
4. Equity premium puzzle
5. Incorporation

RECOMMENDED READING/BIBLIOGRAPHY

• Bagliano,  F-C, Marotta, (2010) G., Economia Monetaria, seconda edizione, Bologna, Il Mulino, 2010, chapters 1 (pp.19.-31), 5 (pp. 165-188 and (198-208) 10 (pp. 309-323).  An alternative textbook in English may be comunicated to English Speaking students upon request at the beginning of the course. .
• Forbes, W., (2009), “Behavioural Finance”, Chichester, UK, John Wiley & sons, capp. 2,3 (except section 3.2.2 and the appendix) ,5,13 (excepting sections 13.1, 13.2, 13.2.1, 13.2.2).
• Notes edited by the teacher (that will be available AND downloadable from “AulaWeb”): “The debate on market efficiency”.
• Notes edited by the teacher (that will be available AND downloadable from “AulaWeb”): "CAPM and APT"
• Bernanke, B. Blinder, A. (1988), "Credit, Money and Aggregate Demand", American Economic Review, vol. 78, no. 2, Papers and Proceedings of the One-Hundredth Annual Meeting of the American Economic Association (May 1988), pp. 435-439. The students may obtain the pdf file of this paper by downloading from the terminals of the Library of the Department terminals. The students may also download from the AulaWeb site of the course, for this specific point, the lecture notes “Il canale creditizio”