Banking and financial macro EC38046

Course information

This is a 3.5 credit course.

Course description

Financial intermediation plays a central role in shaping aggregate outcomes and macroeconomic dynamics. The sector’s regulation is a central concern of policymakers across the globe. This course introduces students to key concepts, empirical facts, and quantitative models relevant for understanding the interplay between financial intermediaries and the macroeconomy.

Content

This course will bring students to the frontier of research at the intersection between macroeconomics and financial intermediation. We will focus on core theories and empirical foundations, building up to frontier quantitative models. Along the way, we will study specific topics such as amplification and business cycles, market power and industrial organization, and financial regulation.

Structure

The course will be conducted in 8 lectures. Coursework will be based on practical exercises focused on solving models either analytically or quantitatively. Students should be familiar with the tools taught in Quantitative Macro Methods.

Syllabus

The first four weeks of the course will be taught by Kyle Dempsey, and the second four weeks will be taught by Rustam Jamilov. The exact syllabus will be determined closer to course offering, but the basic schedule will be as follows:

• Week 1: core theories – Diamond and Dybvig (1983), Diamond (1984, 1991), Holmstrom and Tirole (1997, 1998), Kiyotaki and Moore (1997)
• Week 2: banks’ decisions in quantitative models – Gomes (2001), van den Heuvel (2008), Dempsey (2025)
• Week 3: industrial organization and the financial sector – Wang et al (2022), Dempsey and Faria-e-Castro (2025)
• Week 4: more on IO: choosing between lenders
• Week 5: banks and the financial accelerator – Bernanke and Gertler (1989), Bernanke, Gertler, and Gilchrist (1999)
• Week 6: banks and macro dynamics in the wake of the financial crisis – Gertler and Kiyotaki (2010), Gertler and Karadi (2011)
• Week 7: substitution and aggregate dynamics – Coimbra and Rey (2024), Begenau and Landvoigt (2022)
• Week 8: putting it all together – Corbae and D’Erasmo (2021), Jamilov and Monacelli (2026)
  

Course coordinators

Kyle Dempsey
Rustam Jamilov