Short description:
Monetary economics is a very broad topic area that deals with the effects of money, monetary institutions and monetary policy on macroeconomic variables such as economic business cycles, inflation, interest rates and exchange rates. Almost every day, major news items show that monetary policy is central to the economic welfare of households and the profitability of firms. Think of the regular decisions of central banks on interest rates, and discussions about the economic effects of shifts in exchange rates. Monetary policy has become such a sensitive issue that in recent years many countries have made major constitutional changes regarding their central banks.
In this course we discuss some key principles in monetary economics and the practice of central banks. Among the possible topics are:
Required reading:
No specific textbook for this course. Materials and topics covered in this course are selective and frequently critical of usual textbook models. Recommended reading:
Lewis & Mizen (2000) Monetary Economics, Oxford Univ. Press (selected chapters)
Another useful textbook with relevant chapters is Cecchetti (2008) Money, Banking, and Financial Markets, MacGraw-Hill.
Other specific references will be available with each of the lecture notes.
I provide these course materials (lecture notes, slides, etc.) because I think they may contain useful information for anyone interested in the particular topics. My teaching has never followed a particular single textbook, but covers a careful selection of materials from various sources (multiple textbooks and academic papers). Sometimes this yields material that is decidedly more difficult than most textbooks would accept, but I think empirically more correct and academically more insightful.
Period 2, November-December 2010
My written lecture notes for students contain the stories I tell and provide some more technical details and references.
Exercises/assignments
* Monetary stylized facts - cross country, long-run average relationships
* Features of past U.S. business cycle experience and the most recent 2008 recession
* Taylor rule analysis for the U.S. Federal Reserve monetary policy
Supplementary reading:
* Noyer (2007), The Eurosystem's monetary policy: A view from the inside, speech October 8, 2007
* Mishkin (2007), Will monetary policy become more of a science? FEDS 2007-44 September 2007.
* Issing (2007), The monetary pillar of the ECB, speech June 3, 2005
* Walsh (2001), The science (and art) of monetary policy, FRBSF Economic Letter 2001-13 May 4, 2001
Selected key supporting literature: see attachment FEB23010-2010-11-lit.doc
Older material that was used in previous editions of this course