Financial Markols ano Macrooconomics

Iioro Gollaroi
Norwogian School of Lconomics ano Lusinoss Aominislralion (NHH), Lorgon
Augusl 2001
1ho courso Logins Ly provioing a Lriof inlroouclion lo gonoral oquiliLrium lhoory wilh
complolo ano incomplolo markols wilh a spocial omphasis on issuos concorning assol pricing
ano lnanco. In lhis sol-up lho rolo of oofaull, Lorrowing conslrainls ano limiloo commilmonl
will Lo analyzoo, ano lhoir implicalions for allocalions ano assol pricos oxaminoo. Issuos
concorning socurily oosign ano lnancial innovalion will also Lo aoorossoo ano lho oxlonsion
lo inlnilo horizon oconomios Lrioly oiscussoo.
In lho socono parl of lho courso asymmolric informalion will Lo inlrooucoo ano ils
consoquoncos analyzoo for lho naluro of markols (now for conlracls as woll as socurilios). Wo
will oxamino lho conoilions unoor which compolilivo markols aro viaLlo Lolh wilh aovorso
soloclion ano moral hazaro, ano omcioncy is allainoo al compolilivo oquiliLria.
Iarlicular omphasis will Lo givon lhrough all lho courso lo various applicalions of lho
moools invosligaloo (lo issuos in lnanco ano macrooconomics).
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dqg JH
414 Lqwurgxfwlrq
1. Walrasian oxchango oconomios unoor uncorlainly.
2. Compolilivo oquiliLria wilh soquonlial lraoing: complolo vs. incomplolo lnancial mar-
kols.
8. No arLilrago ano oquiliLrium.
4. Lmcioncy Iroporlios of Compolilivo LquiliLria
Vxuyh|v=
Goanakoplos, J.: Inlroouclion lo Gonoral LquiliLriumwilh Incomplolo Markols, M1 ri Pdwk1
Hfrq., 1000 1-88.
1
Augusl 2001
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Incomplolo Markols, Txduw1 M1 ri Hfrq1, 1086, 220-264.
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. Fully InsuraLlo Iisk:
(a) Malinvauo Lconomios
(L) ArLilrago Iricing Moool.
6. Sunspol LquiliLria
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415 Ilqdqfldo Lqqrydwlrq
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417 G|qdplf Hfrqrplhv zlwk Lqfrpsohwh Pdunhwv
1. Implicalions for lho Lquily Iromium Iuzzlo ano olhor Anomalios
2. Inlorlomporal Smoolhing
8. 1osling for Markol Incomplolonoss
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41714 Eruurzlqj Frqvwudlqwv dqg Olplwhg Frpplwphqw
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5 Dv|pphwulf Lqirupdwlrq dqg Pdunhwv
514 Pdunhwv dqg Lqirupdwlrq
1. Informalional Smallnoss
2. Moral Hazaro
8. Aovorso Soloclion
Augusl 2001
51414 Frpshwlwlyh Htxloleuld zlwk H{foxvlyh Frqwudfwv
(a) Lxclusivily of Conlracls ano Non-linoarily of pricos
(L) Lmcioncy
(c) Slralogic 1raoing ano Convorgonco lo Compolilivo LquiliLria
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51415 Frpshwlwlyh Htxloleuld zlwk Qrq0H{foxvlyh Frqwudfwv
1. Non-Lxclusivily of Conlracls ano Linoarily of Iricos
2. Iooling ano socurilizalion of claims.
8. Lxchangos vs. inlormooiarios
4. ViaLilily of markols wilh asymmolric informalion
Augusl 2001
. Lmcioncy
6. Slralogic 1raoing ano Convorgonco lo Compolilivo LquiliLria
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51416 Udwlrqdo H{shfwdwlrqv Htxloleuld
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