Monetary Policy ii

Course Type: Graduate/Professional 

Course Description: This course introduces monetary theory and policy at an intermediate level. The topics covered are the IS-MP-AD-AS framework, the natural rate hypothesis and the expectations-augmented Phillips curve, New Keynesian economics and the forward-looking Phillips curve, and optimal monetary policy

Mathematical Prerequisites: Basic Algebra, Basic Calculus

Note: The contents for each session may change slightly depending on how the course progresses

Grades: Exercise 1 (20%), Exercise 2 (20%), Final Exam (60%)

Lecture Slides: Click here

Schedule: 

Session 1 – A course introduction and the derivation of the IS curve

Session 2 – The derivation of the MP curve and the AD curve

Session 3 – The derivation of the short-run and long-run AS curves and the IS-MP-AD-AS framework

Session 4 – Output-inflation trade-offs, the expectations-augmented Phillips curve, and the New Keynesian Phillips curve

Session 5 – The basic New Keynesian model and the Taylor principle

Session 6 – Solving the basic New Keynesian model

Team Exercise 1

Session 7 – Solving and simulating the basic New Keynesian model

Session 8 – Divine coincidence, the hybrid New Keynesian Phillips curve, and a case study on the usefulness of the New Keynesian framework

Team Exercise 2

Session 9 – Optimal monetary policy

Session 10 – Optimal monetary policy