Students will further their knowledge of Economics and Finance, and learn how to use and apply economic and statistics tools fairly rigorously. Students should develop the skills required to perform a critical and knowledgeable analysis and autonomous reformulation of the topics they learn in class, to include:

• Demonstrated competency in research skills and information literacy
• Knowledge of how to find, document, and write-up quantitative and mathematical information
• Ability to summarize complex issues (in a rigorous way) with position and/or white papers
• Ability to give short, and professional verbal presentations on research topics

ATTENDANCE REQUIREMENTS AND EXAMINATION POLICY



You cannot make-up a major exam (midterm or final) without the permission of the Dean’s Office. The Dean’s Office will grant such permission only when the absence was caused by a serious impediment, such as a documented illness, hospitalization or death in the immediate family (in which you must attend the funeral) or other situations of similar gravity. Absences due to other meaningful conflicts, such as job interviews, family celebrations, travel difficulties, student misunderstandings or personal convenience, will not be excused. Students who will be absent from a major exam must notify the Dean’s Office prior to that exam. Absences from class due to the observance of a religious holiday will normally be excused. Individual students who will have to miss class to observe a religious holiday should notify the instructor by the end of the Add/Drop period to make prior arrangements for making up any work that will be missed.

Attendance is mandatory.

Week 1 Tuesday, January 20 Financial Assets: valuation and sovereign debt (Professor Merva)

Researching economics and summarizing information for policy and decision-makers: Information resources and writing: the White Paper and the Position Paper. 

Valuation and risk: in this lecture we review the risks associated with stocks and bonds and the factors to consider in assessing that risk for country-specific investments.  The factors effecting sovereign risk and its assessment will be explored. Assignments in this section should reflect the readings listed below in addition to students own research on their specific topic.

Assignment 1 (10%): Prepare an equity research report and presentation for one selected stock.  Guidelines on the Frohring Library website: http://johncabot.libguides.com/EC480/equity-research-report

Report and presentation due Tuesday of Week 3.  The presentation should last 10 minutes.

Assignment 2 (20%) White Paper:  You have been asked by your employer, a pension fund to provide information on a specific country’s investment risk for sovereign bonds: the particular concern is the probability of a sovereign default on the bonds.  You must provide a 4 to 5-page White Paper for your client and give a 10-minute summary report with 3 to 10 power point slides maximum.

Presentations on Tuesday of Week 4; final paper due at the beginning of class Week 5.

See the guidelines on the Frohring Library website for White Papers: http://johncabot.libguides.com/EC480/white-papers

Background Readings:

The Economics and Law of Sovereign Debt and DefaultAuthor(s)Ugo Panizza, Federico Sturzenegger and Jeromin Zettelmeyer, Journal of Economic Literature, Vol. 47, No. 3 (Sep., 2009), pp. 651-698,

To Judge Leviathan: Sovereign Credit Ratings, National Law, and the World Economy Author(s): Christopher M. Bruner and Rawi Abdelal, Journal of Public Policy, Vol. 25, No. 2 (May - Aug., 2005), pp. 191-217.

The European Sovereign Debt Crisis Author: Philip R. Lane, Journal of Economic Perspectives, Vol. 26, No. 3 (Summer 2012), pp. 49-67.

Toward A Bottom-Up Approach to Assessing Sovereign Default Risk: An Update

Edward I. Altman, New York University Stern School of Business, Herbert Rijken, Vrije University

Investment valuation: tools and techniques for determining the value of any asset / Aswath Damodaran. by Damodaran, Aswath. John Wiley, c2002.

Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University:  Spreadsheet Programs: http://people.stern.nyu.edu/adamodar/

Week 2 Tuesday, January 27 (Professor Merva)

Continue lecture on valuation and risk assessment; students should be prepared to discuss their preliminary equity and country selections for Assignments 1 and 2 and the discussion questions handed out in week 1.

Week 3 Tuesday, February 3^rd (Professor Merva)

Assignment 1 Equity Research Reports due at the beginning of class.

Presentation of Equity Research Reports

Lecture on CFA Code of Ethics and Professional Conduct

Week 4 Tuesday, February 10^th  (Professor Merva)

Assignment 2: Student Presentations on Sovereign Debt

In class test on the CFA Code of Ethics and Standards of Professional Conduct.

Week 5 Tuesday, February 17^th (Professor Ruscitti)

Assignment 2 White Papers on Sovereign Debt due at the beginning of class.  Please hand in to Professor Ruscitti.

Microeconomics: Private information, adverse selection and market failure (based on Akerlof`s paper). George A. Akerlof, “The market for “lemons”: quality uncertainty and the market mechanism”, The Quarterly Journal of Economics 84, 488-500, 1970.

Week 6 Tuesday, February 24^th (Professor Ruscitti)

Continue: Microeconomics: Private information, adverse selection and market failure (based on Akerlof`s paper). George A. Akerlof, “The market for “lemons”: quality uncertainty and the market mechanism”, The Quarterly Journal of Economics 84, 488-500, 1970

Week 7: Tuesday, March 3^rd (Professor Ruscitti)

Microeconomics: education and labor market signaling:

M. Spence, “Job Market Signaling”, The Quarterly Journal of Economics 87, 355-374, 1973.

Week 8: Tuesday, March 10^th (Professor Ruscitti)

Imperfect information and credit rationing (based on Stiglitz, and A. Weiss` paper). J. E. Stiglitz, and A. Weiss, “Credit rationing in markets with imperfect information”, The American Economic Review 71, 393-410, 1981.

Week 9: Tuesday, March 17^th (Professor Merva)

Information Cascades

Classroom Games: Information Cascades by Lisa Anderson and Charles Holt, The Journal of Economic Perspectives, Vol. 10, No. 4 (Autumn, 1996)  http://www.jstor.org/stable/2138561

Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades by Sushil Bikhchandani and David Hirshleifer, The Journal of Economic Perspectives, Vol. 12, No. 3 (Summer, 1998) http://www.jstore.org/stable/2647037

Week 10: Tuesday, March 24th (Professor Merva)

Seminar Discussion on a current topic:  Should Greece Leave the Euro zone?  Each student will present cases for and against demonstrating their economic and financial understanding of the event.

Week 11 Tuesday, March 31st (Professor Ruscitti)







Continue: Imperfect information and credit rationing (based on Stiglitz, and A. Weiss` paper). J. E. Stiglitz, and A. Weiss, “Credit rationing in markets with imperfect information”, The American Economic Review 71, 393-410, 1981.

Week 12 Tuesday, April 14^th  (Professor Merva)

Seminar Discussion on Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis Author(s): William J. Baumol Source: The American Economic Review, Vol. 57, No. 3 (Jun., 1967), pp. 415-426 Published by: American Economic Association – students should read the article in advance and be prepared to respond and contribute to discussion questions.

Week 13 Tuesday, April 21st (Professor Merva)

TBD

Week 14 Tuesday, April 28^th  (Professors Ruscitti and Merva)

Microeconomic Research Papers due at the beginning of class.

Final Presentations of microeconomics research paper

Week 15 Scheduled Final Exam meeting (Professor Ruscitti and Merva)

Final presentations of microeconomics research paper