Money and Banking

Avisos:

13/03/2023: página do curso criada.

31/03/2023: A reposição da aula que perdemos no início do curso será feita no dia 26/04. Deste modo a apresenção de paper que ocorreria neste dia passou para 04/05.

Material

Syllabus

Bibliography

Nosal, E., & Rocheteau, G. (2017). Money, payments, and liquidity. 2nd edition. MIT press.

Freixas, X., & Rochet, J. C. (2008). Microeconomics of banking. MIT press.

Lectures

1 - Money as a medium of exchange - discrete money

• Handout

• Code

• Readings

  • Trejos, A., & Wright, R. (1995). Search, bargaining, money, and prices. Journal of Political Economy, 103(1), 118-141.

2 and 3 - Mechanism Design Approach to Money Theory

• Handout 1

• Handout 2

• Code

• Readings

  • Cavalcanti, R. D. O., & Wallace, N. (1999). A model of private bank-note issue. Review of Economic Dynamics, 2(1), 104-136.

4 and 5 - Inflationary policies in Trejos and Wright model

• Handout

• Code - Challenge: find the problem in the code.

• Readings

  • Deviatov, A. (2006). Money creation in a random matching model. Topics in Macroeconomics - BE Journal of Macroeconomics, 6(3).

  • Barros Jr, F. (2014). Inflation when the planner wants less spending (Masters dissertation).

6 - Inside Money

• Handout

• Code

• Readings

  • Cavalcanti, R. D. O., & Wallace, N. (1999). A model of private bank-note issue. Review of Economic Dynamics, 2(1), 104-136.

  • Lagos, R. (2006). Inside and outside money, Staff Report 374, Federal Reserve Bank of Minneapolis.

7 and 8 - Basic Environment in Nosal and Rocheteau and Pure Credit Economies

• Handout

• Code

• Readings

  • Nosal, E., & Rocheteau, G. (2017). Money, payments, and liquidity. 2nd edition. MIT Press. Chapters 1 and 2.

  • Lagos, R., & Wright, R. (2005). A unified framework for monetary theory and policy analysis. Journal of Political Economy, 113(3), 463-484.

9 - Pure Currency Economies

• Handout

• Code

• Readings

  • Nosal, E., & Rocheteau, G. (2017). Money, payments, and liquidity. 2nd edition. MIT Press. Chapter 3.

  • Lagos, R., & Wright, R. (2005). A unified framework for monetary theory and policy analysis. Journal of Political Economy, 113(3), 463-484.

10 - Friedman Rule

• Handout

• Code

• Readings

  • Nosal, E., & Rocheteau, G. (2017). Money, payments, and liquidity. 2nd edition. MIT Press. Chapter 6.

  • Lagos, R., & Wright, R. (2005). A unified framework for monetary theory and policy analysis. Journal of Political Economy, 113(3), 463-484.

11 - The Monitoring Role of Banks

• Handout

• Code

• Readings

  • Townsend, R. (1979), Optimal Contracts and Competitive Markets with Costly State Verification. Journal of Economic Theory  21 265-293.

  • Diamond, Douglas W. (1984), Financial Intermediation and Delegated Monitoring. Review of Economic Studies 51, 393-414.

  • Williamson, Stephen D. (1986), Costly Monitoring, Financial Intermediation, and Equilibrium Credit Rationing. Journal of Monetary Economics 18, pp. 159-1.

12 - Ricardo´s presentation

Presentations

May 03, 04 and 10

Each student should choose a paper to present to the class.

Lucas - Andolfatto, D. (2021). Assessing the impact of central bank digital currency on private banks. The Economic Journal, 131(634), 525-540.

Paolo - Altermatt, L., Iwasaki, K., & Wright, R. (2023). General equilibrium with multiple liquid assets. Review of Economic Dynamics.

Samuel - Geromichalos, A., & Jung, K. M. (2018). An Over‐the‐Counter Approach to the FOREX Market. International Economic Review, 59(2), 859-905.