Lecture 10
Domestic &
International Money
Markets
Tuesday, March 10, 2009

Last Time & Today
Descriptions of Market Processes
Tuesday, March 10, 2009

What I want you to learn
Domestic & International Money Markets
Matter, especially in illiquid times.
Tuesday, March 10, 2009

Turbulence needs
Liquidity to ride out
the storm
Tuesday, March 10, 2009

Problem: The Market can
stay ‘irrational’ longer
than you can stay
solvent.
Tuesday, March 10, 2009

Domestic
Tuesday, March 10, 2009

Loanable Funds
Demand, Supply per item, !
S(p)
D(p)
Price/Item, !
Tuesday, March 10, 2009

Simple Pictures
Tuesday, March 10, 2009

Tuesday, March 10, 2009

Tuesday, March 10, 2009

Tuesday, March 10, 2009

Public Issue
Tender Issue
T-Bills Auction Issue
Direct Placement
+ Tranches
Tuesday, March 10, 2009

Commercial Paper
Interbanks
Also: Acceptances, Repurchases
CDs
Tuesday, March 10, 2009

Cool Reading:
Carpenter and
Demiralp, 2006
Tuesday, March 10, 2009

International
Tuesday, March 10, 2009

Tuesday, March 10, 2009

Tuesday, March 10, 2009

Eurodollars/Euromarket
Tuesday, March 10, 2009

Tuesday, March 10, 2009

Next Time
Read Pilbeam, Cht 11 and 12,
Liebowitz, (2005), on site.
Bonds
Tuesday, March 10, 2009