Economics: Sub-Branches of (Micro and Macro) Economics
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Description: The course provides experience in research and application understanding the sub-branches of economics including: financial economics; international economics; transaction cost economics; labour economics; and environmental and energy economics.
Background: Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade". Its concern is thus the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. It has two main areas of focus: Asset pricing (or "Investment theory") and corporate finance; the first being the perspective of providers of capital and the second of users of capital.
The subject is concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment". It, therefore, centres on decision making under uncertainty in the context of the financial markets, and the resultant economic and financial models and principles, and is concerned with deriving testable or policy implications from acceptable assumptions. It is built on the foundations of microeconomics and decision theory.
Financial econometrics is the branch of Financial Economics that uses econometric techniques to parameterize these relationships. Mathematical finance is related in that it will derive and extend the mathematical or numerical models suggested by Financial Economics. Note though that the emphasis there is mathematical consistency, as opposed to compatibility with economic theory.
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