The proper functioning of financial markets is essential for the functioning of any advanced market economy. This course deals with important challenges to economic policymakers that are related to financial markets. In the first session, we present basic analytical instruments and provide an overview of some fundamental results from general equilibrium theory. Based on this, we study why financial markets are needed in practice. In the second session, we analyze in detail the role of financial intermediaries. We study cases in which financial markets fail to work properly and we discuss appropriate policy responses (session 3). The last three sessions are devoted to the analysis of fiscal and monetary policy measures that may affect financial markets and to the design of a new financial and economic order in Europe.
This course is offered as the advanced replacement course for the C7 Applied Economic Analysis course. Therefore some prior knowledge in economics and minimal mathematical skills (taking derivatives and solving equations with two unknowns) are essential. The course is most valuable for students with a background in business or economics and the desire to deepen their understanding of financial market policy and to pursue a career in an institution such as a central bank, the World Bank or the IMF.