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If you wish to apply to join any of the CeFiMS programmes by distance learning, please first complete this online form and submit. [New window]

Centre for Financial & Management Studies (CeFiMS) - University of London

Individual Professional Courses – IPC  

Macroeconomic Policy & Financial Markets [FME101]

Introduction

Macroeconomic Policy and Financial Markets focuses on the relation between macroeconomic factors, macro economic policy and financial markets and institutions. Financial markets and institutions are treated as the central elements in the transmission of macroeconomic policy.

Resources

Students will both receive course material and be required to access course units and resources at the CeFiMS Online Study Centre. These materials are carefully structured to provide the main teaching and are equivalent to course lectures, defining and exploring the main concepts and issues, locating these within current economics debate and introducing and linking the further assigned readings. Assignments, which are marked by tutors contracted by the University of London, and a specimen examination paper are also sent to students, along with the following:

Textbooks:

David Miles and Andrew Scott Macroeconomics: Understanding the Wealth of Nations, 2002, New York, John Wiley and Sons Inc. ISBN 0-470-84288-1

Readings and Resources:

A compilation of further readings made up of recently published articles or seminal writings which augment and illustrate the core themes is provided. Databases and other weblinked resources as well as multimedia also form part of the course.

Course Timetable:

This shows the linkage between the various components of the course and indicates the schedule for reading the texts, watching the video lectures, completing audio exercises, submitting assignments, etc.

Course Content

Unit 1 Growth and Fluctuations

This unit financial flows, price of finance, and the real economy. The unit also looks at aggregate demand and supply.

Unit 2 Savings and Financial Markets

This unit looks at savings flows, fundamentals (demography, institutional structure, and preferences), and interest rates. It also examines expectations and uncertainty. These issues are further examined through a case study which looks at Japan.

Unit 3 Investment and Financial Markets

The issue surrounding technology, cost of capital measures, Tobin’s q., credit and internal funds are examined and these issues are further developed through a case study which looks at the United States.

Unit 4 Interest Rates

This unit examines nominal and real interest rates on riskless securities. The influences on the term structure of rates are examined including interest rates and expected inflation. The unit continues with by looking at risk premia on fixed interest securities and the relationship between fixed interest yields and equity returns (illustrated by the example of the Wall St equity premium puzzle).

Unit 5 Inflation

The roles of monetary growth and expectations in determining the rate of inflation form the basis of this unit. The impact of inflation on financial markets is also looked at.

Unit 6 Monetary Policies

In this unit, an examination of the transmission mechanism of monetary policy through financial markets is examined. Transmission through real money balances and transmission through the credit channel are also looked at. The nature and impact of Central banks’ monetary policy and the effect of financial market expectations are also covered.

Unit 7 Fiscal Policy

The impact of fiscal policy on financial markets and the relationship of fiscal policy to real adjustments froms the basis of this unit.

Unit 8 Macroeconomics and International Capital Markets

This unit examines the consequences on international capital markets of the impact of macroeconomic factors such as: exchange rate regimes and independence of policy; and uncovered interest rate parity; The unit concludes with a look at international transmission of fluctuations and the process of financial market contagion.

Tuition & Assessment

Macroeconomic Policy and Financial Markets is assessed by two assignments which count towards the final grade, and by a three-hour examination held in the autumn. Each assignment consists of compulsory questions or an essay topic which should be answered, in total, in no more than 2500 words. Assignments count for 30% of the overall grade for this course, while the examination is worth 70% of the final assessment.