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Week 6 — Lectures 10 & 11, Reading 5
Perry Mehrling's Money and Banking MOOC
Location:
Online
Type:
Other
YSI Presenters
Description
We're discussing the following for week 6:
Lecture 10: Dealers and Liquid Security Markets
Lecture Notes
Introduction to the Treynor model of the economics of the dealer function. Inventories absorb order flow mismatches. Market liquidity vs. funding liquidity. Matched book vs. gross exposure. Arbitrage and brings liquidity.
Lecture 11: Banks and the Market for Liquidity
Lecture Notes
Generalize the Treynor model to banks (a.k.a. money dealers). Why is it profitable for banks to run the payment system at par when there's no bid/ask spread? How the Fed manages interest rates (floor vs. corridor system). The evolution of shadow banking.
Reading 5: Three chapters from A Market Theory of Money by John Hicks (1989)
Study Questions
Hicks reinforces some of what we've already learned in the course so far, namely that banks are a kind money dealer. But he also ties the function money to the "real" side of the economy—the market for goods and services—which Mehrling tends not to emphasize.
Hosted by Working Group(s):
Organizers
Attendees
Alex Howlett
Win Monroe
Jennifer Judge
Bethany Burum
Ádám Kerényi
Rok Piletic
Godfrey Chipinda
Jim Bramlett
Jonah Wolf
Chris Rimmer
Ramon Gimenez
Larissa de Lima
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