Advanced Monetary Macro
Advanced Monetary Macro
This is a class on monetary economics. We cover the major traditional approaches to monetary theory and policy in macro with a special focus on the interaction between fiscal and monetary policies. We present the foundations of money in dynamic economies and we analyze the fiscal/monetary interaction in a simple framework. Then we incorporate the fiscal analysis to medium scale DSGE models to discuss its empirical relevance and to cover a variety of topics related to some current issues in monetary economies.
We will discuss the role of money in models for monetary analysis.
Intro
Monetary models with and without money (and a discussion about this)
Determinacy in the New-Keynesian model: local and global dynamics
Determinacy in the NK model under hyperinflations
Monetary Fiscal interactions
Fiscal Theory of the Price Level
Unpleasant Monetarist Arithmetic
Ricardian and Non-Ricardian economies
Referencias: https://phdmacrobook.org/
(lista de lecturas en el syllabus)
Classes
Intro to macro models (old, not to be covered in class)
brief intro to monetary models
McKay and Ravn (2025), phdmacrobook ch 17
Cochrane (2011)
Benhabib, Schmitt-Grohe and Uribe (2001)
Monetary and Fiscal interactions
Cochrane (1998)
Cochrane (2024)
Neumeyer-Nicolini (2024)
Caramp and Silva (2023)
Leeper (1991)
Loyo (1999)
Sargent (1982)
Additional results in monetary models with F/M interactions (Open Market Operations, Cashless limit, OG)
Monetary models: OG (Basic, Unpleasant, FT)
Some key references
References
1. Araujo, Aloısio Pessoa de, et al. “Inflation targeting under fiscal fragility.” (2020).
2. Aruoba, S. Boragan, and Randall Wright. “Search, money, and capital: a neoclassical dichotomy.” Journal of Money, Credit and Banking (2003): 1085-1105.
3. Aruoba, S. Boragan. “Money, search, and business cycles.” International Economic Review 52.3 (2011): 935-959.
4. Benhabib, Jess, Stephanie Schmitt-Grohe, and Martin Uribe. “Avoiding liquidity traps.” Journal of Political Economy 110.3 (2002): 535-563.
5. Bianchi, Francesco. “Regime switches, agents’ beliefs, and post-World War II US macroeconomic dynamics.” Review of Economic studies 80.2 (2013): 463-490.
6. Bianchi, Francesco, and Leonardo Melosi. “Escaping the great recession.” American Economic Review 107.4 (2017): 1030-1058.
7. Bianchi, Francesco, and Cosmin Ilut. “Monetary/fiscal policy mix and agents’ beliefs.” Review of economic Dynamics 26 (2017): 113-139.
8. Calvo, Guillermo A. “Servicing the public debt: The role of expectations.” The American Economic Review (1988): 647-661.
Junior, Celso J. Costa, Alejandro C. Garcia-Cintado, and Karlo Marques Junior. “A modern approach to monetary and fiscal policy.” International Review of Economics Education 39 (2022): 100232.
10. Cochrane, John H. “A frictionless view of US inflation.” NBER macroeconomics an-nual 13 (1998): 323-384.
11. Cochrane, John H. “Inflation determination with Taylor rules: A critical review.” Available at SSRN 1012165 (2007).
12. Cochrane, 2005. ”Money as Stock,” Journal of Monetary Economics.
13. Cochrane, John H. “The fiscal theory of the price level: An introduction and overview.” Journal of Economic Perspectives (2021).
14. Del Negro, Marco, and Christopher A. Sims. “When does a central bank s balance sheet require fiscal support?” Journal of Monetary Economics 73 (2015): 1-19.
15. Hilscher, Jens, Alon Raviv, and Ricardo Reis. “Inflating away the public debt? An empirical assessment.” The Review of Financial Studies 35.3 (2022): 1553-1595.
16. Hornstein and Krusell, Money (ch 15) Macroeconomics
17. Lagos, Ricardo, and Randall Wright. “A unified framework for monetary theory and policy analysis.” Journal of political Economy 113.3 (2005): 463-484.
18. Leeper, Eric M. “Equilibria under ‘active’and ‘passive’monetary and fiscal policies.” Journal of monetary Economics 27.1 (1991): 129-147.
19. McKay and Ravn, “Nominal frictions and the business cycle”, Ch 16, Macroeconomics
20. Neumeyer, Pablo Andres, and Juan Pablo Nicolini. “The Incredible Taylor Principle”. ́No. 790. 2022.
21. Sargent, Thomas, and Neil Wallace. “Inflation and the government budget constraint.” Economic policy in theory and practice. London: Palgrave Macmillan UK, 1987. 170-207.
22. Sargent, Thomas J., and Neil Wallace. “Some unpleasant monetarist arithmetic.” Monetarism in the United Kingdom. London: Palgrave Macmillan UK, 1984. 15-41.
Uribe, Martin. “A fiscal theory of sovereign risk.” Journal of Monetary Economics 53.8 (2006): 1857-1875.
24. Woodford, 1994. ”Monetary Policy and Price Level Determinacy in a Cash-in-Advance Economy,” Economic Theory.
25. Berndt, Lustig and Yeltekin, 2012. ”How Does the US Government Finance Fiscal Shocks?,” American Economic Journal: Macroeconomics.
26. Bouscasse and Hong, 2023. ”Monetary-Fiscal Interactions in the United States,” Working Paper.
27. Hall and Sargent, 2023. ”Fiscal Consequences of the US War on COVID,” Working Paper.
28. Barro and Bianchi, 2023: “Fiscal Influences on Inflation in OECD Countries,
29. Wallace, 1981. “A Modigliani-Miller Theorem for Open-Market Operations”, American Economic Review.
30. Sims, 2013. ”Paper Money,” American Economic Review.
31. Hall and Reis, 2015. ”Maintaining Central-Bank Financial Stability under New-Style Central Banking,” CEPR Discussion Papers 10741, CEPR Discussion Papers.