Module 1: Macroeconomic theory: Concepts, methods and tools of macoeconomic analysis in a financialized economy (3 days)
This module will include explaining the principle of effective demand, labour and money and capital market, distinguishing features of monetized exchange. It will also introduce the characteristics of the modern financial sector, with a particular emphasis on US, European financial system and discuss the recent crisis and policy imperatives.
Module 2: Microeconomic theory (2 days)
The macroeconomic analysis in Module 1 will be complemented by microeconomic analysis of financial markets and would explain the reasons for the failure of the price mechanism particularly in money and financial markets e.g. moral hazard, asymmetric information, adverse selection, and their relation to insurance principle.
Module 3: Risk, Uncertainty, and Pricing (3 days)
- Treatment of risk and uncertainty in information and communication theory, and possible modeling methods for economics and finance.
- Models for pricing of financial products and instruments – options, credit derivatives and securities.
Module 4: Financial sector-Real economy interaction (2 days)
- Macroeconomic approach – The Stock-Flow Consistency Framework (SFC)
- Network theory and the analysis of systemic risk; methods from ecology/biology for modeling systemic risk.
Module 5: Financial crashes and Macroeconomic recession: Interdisciplinary modeling strategies (2 days)
- Theoretical modeling of critical transitions and Early Warning Signals in Ecological systems.
- Comparison with economic/financial systems and its implications in terms of statistical and empirical analysis. In this context theories of gradual versus abrupt change and their implication will be discussed using ideas from Ecological literature.