macro monetaria y financiera
this course provides an introduction to monetary economics from both theoretical and empirical perspectives. We start by looking at the data to study the main short and long run facts in monetary economies. Then we present the theoretical frameworks used to capture and understand the roles of money in modern economies. We review monetary policy rules and their interaction with fiscal policy.
we cover the theory of money creation, the role of central banks and the private banks together with risks that arise in banking systems.
Schedule and exams
Final: May 31st, 15hs to18hs
Extraordinaria: June 21st, 18hs to 21hs
Midterm: week 8th March 22th in the practice sessions
Cont Eval 50% (30% assignments + 20% midterm)
Final 50%
assignments (to be solved in practice sessions)
assignment 1: week 4 (feb 23rd)
assignment 2: week 7 (march 15th)
assignment 3: week 11 (april 19th)
assignment 4: week 14 (may 10th)
assignment 5: español, english (optional), deadline: June 6th.
week 1: intro, motivation and data
intro, motivation, and a look at the data
References:
McCandless and Weber (1995) “Some Monetary Facts” Federal Reserve Bank of Minneapolis Quarterly Review 19(3): 2-1. [paper]***
DeGrauwe and Polan (2005) “Is Inflation Always and Everywhere a Monetary Phenomenon?” [paper]
Gertler and Hofmann (2016) "Monetary facts revisited" [paper]
Rongrong Sun (2014) "Review over Empirical Evidence on Real Effects of Monetary Policy" Mimeograph. [paper]
Nagel and Parker (2003) "Empirical Macroeconomics: The Effects of Monetary Policy" [paper]
Walsh (2010) capítulo 1***
Gertler and Hofmann (2016), "Monetary facts revisited". BIS wp566 [paper]
week 3: overlapping generations models (OG)
intro to OLG models of money
RED: español, english (planner's problem)
References:
Wallace, N., 1978. The overlapping generations model of fiat money. in Models of Monetary Economies. Federal Reserve Bank of Minneapolis. [paper]
Wallace and McCandless, 1992. Introduction to Dynamics Macroeconomic Theory. Harvard University Press. (Ch1)***
Champ, B., Freeman, S., Haslag, J., 2011. Modeling monetary economies. Cambridge University Press. (Ch1)***
week 4: OG with money, Inefficiency of inflation - extensions
intro to OG models of money
RED: español, english Exercises of models with money.
References:
Wallace, N., 1978. The overlapping generations model of fiat money. in Models of Monetary Economies. Federal Reserve Bank of Minneapolis. [paper]
Champ, B., Freeman, S., Haslag, J., 2011. Modeling monetary economies. Cambridge University Press. (Ch1, Ch3, Ch6 & Ch7)***
Wallace and McCandless, 1992. Introduction to Dynamics Macroeconomic Theory. Harvard University Press. (Ch1)***
Wallace, N., 2008. Competitive trade using money. Unpublished classnotes. [link]
further resources
seigniorage in the EU: link
seigniorare and negative rates: link
weeks 5: Lucas island model
Real effects of monetary policy - philips curve
RED: OLG with capital , OLG con capital (old notation, needs to be updated)
References:
Lucas Jr, Robert E. "Expectations and the Neutrality of Money." Journal of economic theory 4.2 (1972): 103-124.
Lucas, Robert E. "Some international evidence on output-inflation tradeoffs." The American Economic Review 63.3 (1973): 326-334.
Lucas Jr, Robert E. "An equilibrium model of the business cycle." The Journal of Political Economy (1975): 1113-1144.
Lucas Jr, Robert E., and Leonard A. Rapping. "Real wages, employment, and inflation." Journal of political economy 77.5 (1969): 721-754.
Romer 2010 Ch 6.9, 6.10
Champ, Freeman and Haslag 2010, Ch 5
Additional references (interesting stuff)
What's up with the Phillips Curve? Del Negro et al (2020)
week 8: Budget Constraints
budget constraints and government debt
RED: español, english (midterm review)
References
Giannitsarou and Scott (2006) “Inflation Implications of Rising Government Debt” NBER Working paper series. Paper 12654. [paper]
Buiter (1982) "The Proper Measurement of Government Budget Deficits: comprehensive wealth accounting or permanent income accounting for the public sector: its implications for policy evaluation and design" NBER Working Paper No. 1013 [paper]
Walsh (2010) capítulo 4***
Fischer (1989) "The economics of the government budget constraint" [link]***
week 9: Monetary and fiscal policy interaction
RED: español, english
References
Aiyagari and Gertler (1985), "The backing of government bonds and monetarism", Journal of Monetary Economics, Vol. 16, Issue 1, July 1985, Pages 19-44.
Sargent, T. (1982) "Beyond Demand and Supply Curves in Macroeconomics", The American Economic Review, vol. 72, No. 2, Papers and Proceedings of the Ninety-Fourth Annual Meeting of the American Economic Association (May, 1982), pp. 382-389
Sargent, T. (1982) "The Ends of Four Big Inflations", in Inflation: Causes and Effects, Ed. Robert E. Hall, University of Chicago Press.
Fowley and Neely (2013) Four Stories of Quantitative Easing [link]
week 11: Unpleasant Monetarist Arithmetic
week 12: Central Banks
banks and money creation
RED: (revise homework 3)
References
J. Hooley, A. Khan, C. Lattie, I. Mak, N. Salazar, A. Sayegh, and P. Stella (2023), "Quasi-Fiscal Implications of Central Bank Crisis Interventions". IMF WP/23/114*
J. Hooley, C. Lattie, and P. Stella, "Quasi-Fiscal Implications of Central Bank Crisis Interventions: Case Studies".IMF WP/23/115*
Jakab Z, Kumhof, M (2015) Banks are not intermediaries of loanable funds - and why this matters* [link]
Champ, B., Freeman, S., Haslag, J., 2011. Modeling monetary economies. Cambridge University Press. (Ch8)
Rule G 2015 "Understanding the Central Bank Balance Sheet" [link]
Keister T and McAndrews J, 2009 "Why Are Banks Holding So Many Excess Reserves?" [link]
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
ECB operation and liquidity management
week 13: Bank Runs
banks liquidity and solvency risks
RED: español, english (additional ex, english)
References
Diamond and Dybvig, "Bank Runs, Deposit Insurance, and Liquidity", The Journal of Political Economy, Vol. 91, No. 3. (Jun., 1983), pp. 401-419
Freixas Rochet (1997), "Microeconomics of Banking", Ch7
Champ, B., Freeman, S., Haslag, J., 2011 (Ch 12). Modeling monetary economies
About SVB Failure, March 2023:
https://www.fdic.gov/news/press-releases/2023/pr23016.html?utm_source=substack&utm_medium=email
https://johnhcochrane.blogspot.com/2023/03/silicon-valley-bank-blinders.html