Economics of financial markets - F000764

Specific course requirements

 

The course discusses the interaction between economic developments and the behaviour of financial markets. This interaction is two-way: the economy influences markets which in turn influence the economy via e.g. wealth effects or via the influence on monetary policy conducted by central banks. This interaction is very dynamic and non-linear.


The interaction is analysed from the perspective of different stakeholders (governments, central banks, investors) but most time is spent on the perspective of the investor: how to read and interpret business cycle developments? What to expect in terms of fiscal or monetary policy reaction? What is already priced in and what not (the role of economic surprises)? How does the risk premium evolve over time? What drives expected returns?


Considerable attention is paid to investing in financial markets, which can be considered as the ultimate purpose of analysing economic developments and how they interact with markets. Investing not only means how to determine views on the economic and market outlook but also how to exploit diversification opportunities and how to deal with risk and uncertainty.

Students need to have a good understanding of international macroeconomics and monetary economics. This is a prerequisite (although there will not be a preliminary test before attending the course). Insufficient understanding of macroeconomics and monetary economics will mean that the course material will be difficult to understand.


The course material consists of about 25 research papers which will be discussed in detail in class. As illustration material, extensive use is made of videos (Reuters, Bloomberg) which are discussed in class on a weekly basis.

The teacher, Prof. Dr. William De Vijlder, runs a blog (http://williamdevijlder.bnpparibas-ip.com/english/) which is mandatory reading . The same applies to Twitter, so as to stay informed of market-related thoughts and comments: @DeVijlder. He has been running the blog since 2008 and all texts which have been posted since the launch have been bundled in a pdf file which is mandatory reading before the start of the course.

    General course specifications

    Consult the general specifications of this course in the exchange programme in economics and business admin.