Authorised by Academic Registrar, April 1996
Objectives Building on the foundations of macroeconomics and microeconomics, this subject aims to extend and deepen knowledge of the theoretical structure of an open economy, with particular emphasis on monetary policy formulation and implementation. Students will acquire an understanding of the institutional structure of the Australian financial system, in order to develop skills in creative analysis and prediction when faced with internal and external market shocks. This will be achieved within the framework of a general equilibrium model that allows for competitive international capital markets and floating exchange rates.
Synopsis The subject covers the concept of money, the financial system and financial intermediation, the nature and roles of the Reserve Bank, banks, money market dealers and non bank financial institutions. It deals with the role and interaction of financial markets and the determination of interest rates, foreign exchange markets and the determination of exchange rates, the interaction between foreign exchange and money markets and implication for policy and Reserve Bank prudential regulation.
Assessment Two assignments (each 2000 words) 30% + Examination (3 hours): 70% + Students must obtain a satisfactory result in all areas of assessment