This is the course page for EC4024, Financial Economics, Spring 2015.
1. Introduction to the module. (updated, .pdf)
What is the purpose of finance? Basics of valuation, how investors value firms, how firms take decisions to invest. An example from real estate finance.
2. How to read a balance sheet, what equity is, and isn’t, how leverage works. The role of leverage in the collapse of the Irish economy.
- Adrian and Shin, 2009, Liquidity and Leverage.
- Bolton et al, Investment, Liquidity, and Financing under Uncertainty
- Ronan Lyons, Thomas Piketty and the subsidy of leverage.
- McLeay et al, Money creation in the modern economy, Bank of England
- Tobin, J (1963), ‘Commercial banks as creators of ‘money’’, Cowles Foundation Discussion Papers No. 159.
- Oliver Williamson: The theory of the firm as governance structure: from choice to contract. Journal of Economic Perspectives, 2002.
- Shleifer and Vishny, A Survey of Corporate Governance, Journal of Finance, 1997
5. How Lombard Street works, theory of the dealer, and your very first real supply and demand curves. Stigum’s Money Markets, the economics of the dealer function.
- Merling, New Lombard Street, Chapters 2 and 3.
- M.F.M Osborne, The Stock Market from a Physicist's Viewpoint, Crossgar Press, 1977 Chapter 2 and Chapter 3.
- Janeway, William "Doing Capitalism in the innovation economy: Markets, capitalism, and the State", Cambridge University Press, 2013
- Jack Treynor, The economics of the dealer function
- K. Pilbeam, Finance and Financial Markets, 3rd Ed, Palgrave, 2009, chapter 6.
- Stigma's Money Markets, chapter2, 1, 2, and 3 (up to Duration and Convexity).
- Watch John Quiggin's lecture on Zombie Economics.
- Watch Paul Samuelson's Masters of Finance interview.
- Modigliani, F. and Miller, M. (1958) "The Cost of Capital, Corporation Finance and the Theory of Investment", American Economic Review 48 (3), pp. 261-297.
- Fama, E.F. (1970) "Efficient Capital Markets: A Review of Theory and Empirical Work", Journal of Finance 25 (2), pp. 383-417.
- André F. Perold The Capital Asset Pricing Model The Journal of
- Economic Perspectives, Vol. 18, No. 3. (Summer, 2004), pp. 3-24.
- (Here are some Notes on CAPM I made a few years ago)
- Anne Villamil, Modigliani Miller Theorem, New Palgrave Dictionary of Economics
- Greenwald, B. C. and Stiglitz, J. E. (1993). Financial market imperfections and business cycles. The Quarterly Journal of Economics,108(1)
- Perez, C. (2010). Technological Revolutions and Techno-Economic Paradigms. Cambridge Journal of Economics, 34(1).
- Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5)
- Arnuk, Sal and Joseph Saluzzi (2012), Broken Markets, Chapters 2 and 10.
- Tarun Chordia, Amit Goyal, Bruce N. Lehmann, Gideon Saar (2013) High-frequency trading, Journal of Financial Markets 16(4).
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System
- Anton Badev and Matthew Chen Bitcoin, technical analysis and background data. Federal reserve board, 2014
- Pavel Ciaian et al, The Economics of BitCoin Price Formation.
Supplementary Texts: There is no textbook for this module, but a few books might aid students.
- Keith Pilbeam, Finance and Financial Markets, Second Edition, Palgrave, 2005.
- Frank Fabozzi et al, Financial Economics, Wiley, 2012
- Perry Mehrling, The New Lombard Street, Princeton, 2010.
- Ryan Collins et al, Where does Money come from? New Economic Foundation, 2012
- Marcia Stigum, Stigum’s Money Market, 4th
- Anat Adamati and Martin Hellwig The Banker’s New Clothes: What’s wrong with Banking and What to do about it. Princeton, 2014.
- Deirdre McCloskey, Economical Writing, Waveland Press, 1999.