Central Banks, Macroeconomic Policy and Financial Markets

Catalog description

Understanding and predicting central banking decision making and behavior is crucial for all market participants from asset managers and traders to private consumers. This course aims to provide the methods and knowledge on how central banks and governments think and implement policies to reach the goals of price and financial stability as well as support of growth and employment. The core of the course connects between the legal and actual goals that central banks follow and the related economic analysis on which these goals and policies are set. We explain the economic rationale for the policy prescriptions to reach the goals and how these policies are actually implemented by the Federal Reserve Bank (Fed) in the US, the European Central Bank (ECB), Bank of Israel (BOI) and some remarks on other countries. We use data, current events since 2007 as the basis for discussion and assignments. The second half of the class discusses the implications of these policies for equity and bond valuations. Students will be asked to forecast live policy decisions and implied market valuations. This course is for Wharton Executive MBA students only.