This course is an analysis of how the operation and behavior of financial markets are influenced by monetary policy, the actions taken by the Federal Reserve to promote full employment, price stability, and moderate long-term interest rates. Emphasis is placed on studying the interaction between financial intermediaries (e.g., commercial banks, investment banks, mutual funds, hedge funds, etc.) and a nation's central bank. Students are introduced to the modern theories of the demand for and supply of money, as well as their implications for economic activity, the cost of living, employment, and the conduct of monetary policy. Particular emphasis is given to recent Fed policy, including Quantitative Easing and Quantitative Tightening and the impact of these policies on asset prices and long-term interest rates. Furthermore, through an extensive use of Bloomberg in this class students learn how to analyze the impact of these and other Fed policies on the U.S. economy and financial markets to provide a window into how modern practitioners in the discipline follow and respond to changes in U.S. monetary policy. Prerequisites: macro theory and econometrics.
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