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MSc Economics
(Academic Year 2016/2017)
Prof. Dr. Harald Benink
Dr. Burak Uras
Course objective:
The aim of the seminar is to help students understand the mechanisms that make
financial institutions important for the economy. Specifically from both a theoretical
and an applied perspective, we will investigate the interactions between financial
development, short-run business cycles and long-run economic growth &
development. The course will also explore the dynamics that shape the institutions of
a societies' financial structure over the long-run, and study the complexities of
financial policy design in the context of integrated global markets.
An important final objective of the course will be to familiarize students with current
debates on financial markets, including policy issues arising from the Great Financial
Crisis of 2007-2009. In this respect, attention will be paid to lessons and
consequences for the US, Europe, Asia. Moreover, attention will be paid to the rise of
shadow banking and emerging problems with respect to market liquidity.
Course contents:
The course will consist of interactive lectures (please see below for a detailed
schedule). Students are supposed to prepare for class by studying the required
reading material and to participate actively in class discussions.
Required reading:
Papers, book chapters and other articles listed below under each lecture. The
required reading is the mandatory literature for the written exam; the recommended
reading should be considered as background reading.
Recommended prerequisites:
Students should have a strong background in money and banking, empirical
research methodologies and macroeconomics and a Bachelor's level of
mathematical statistics (and/or econometrics). Students who have done their BSc in
Tilburg should have taken all relevant courses in finance and banking and
macroeconomics, student who have done their BSc elsewhere should have
equivalent skills.
Grading:
The final course grade (100%) consists of:
Grade for written exam or written re-exam (80%)
Grade for group assignment (20%); the group assignment grade will remain
valid for the written re-exam
1
Repeaters of previous years have to re-do all course elements (both written
exam/re-exam and group assignment)
Contact:
Harald Benink: H.A.Benink@tilburguniversity.edu (course coordinator)
Burak Uras: R.B.Uras@tilburgunivesrity.edu
Required reading:
Greenwood, J., Jovanovic, B., 1990. Financial Development, Growth, and the
Distribution of Income, Journal of Political Economy, 98 (5), 1076-1107.
Recommended reading:
Banerjee, A., Newman, A., 1993. Occupational Choice and the Process of
Development, Journal of Political Economy, 101 (2), 274-298.
Bencivenga, V., Smith, B., 1991. Financial Intermediation and Endogenous Growth,
Review of Economic Studies, 58 (2).
Bencivenga, V., Smith, B., Starr, R., 1997. Transaction Costs, Technological Choice,
and Endogenous Growth, Journal of Economic Theory, 67, 153-177.
King, R., Levine, R., 1993. Finance, entrepreneurship, and growth, Journal of
Monetary Economics, 32.
Uras, B., 2014. Financial Development, Long-Term Finance and Macroeconomy:
The Role of Secondary Markets, European Banking Center Working Paper.
Tirole, J., 2011. Illiquidity and All Its Friends, Journal of Economic Literature, 49 (2),
287-325.
Lecture 6: Thursday, November 3 (Burak Uras)
Agency Costs, Financial Constraints, Asset Prices and Business Cycles
Key topics:
(1) Aggregate productivity shocks, agency costs and firms balance sheets
(2) Explaining business cycle amplification with agency costs models
(3) Collateral value and financial constraints
Required reading:
Bernanke, B., Gertler, M., 1986. Agency Costs, Net Worth, and Business
Fluctuations, American Economic Review, 79 (1) 14-31.
Kiyotaki, N., Moore, J., 1997. Credit Chains, Journal of Political Economy.
Recommended reading:
Bernanke, B., Gertler, M., Gilchrist, S., 1996. The Financial Accelerator and Flight to
Quality, Review of Economics and Statistics, 78 (1).
Kashyap, A., Stein, J., Wilcox, D., 1993. Monetary Policy and Credit Conditions:
Evidence from the Composition of External Finance, American Economic Review, 83
(1).
Kashyap, A., Stein, J., 2000. What Do a Million Observations on Banks Say About
the Transmission of Monetary Policy? American Economic Review, 90 (3).
Williamson, S., 1986. Costly Monitoring, Financial Intermediation, and Equilibrium
Credit Rationing, Journal of Monetary Economics, 18 (2).
Recommended reading:
Beck, T. (Editor), 2011. The Future of Banking, CEPR.
http://www.voxeu.org/index.php?q=node/7147
Lecture 8: Thursday, November 10 (Guest lecturer, Kempen Capital
Management)
Investment Management in Turbulent Times
Recommended reading:
Powerpoint presentation (to be posted on Blackboard).