This is a period
(7 weeks) course. There will be 14 lectures and a number (around
4) of problem sets. There will be final exam at the end of the
module. It will weight 70% of the total grade with the rest of
the weight allocated to the problem sets.
The aim of the
course is to introduce students to the different approaches to
incorporating money into dynamic general equilibrium framework.
The course will also cover some topics in monetary policy.
The basic textbook
which will be followed fairly closely is C. Walsh “Monetary Theory
and Policy” MIT Press, 1998, 2000.
Basic stylized facts on money
and its effect on output and other macroeconomic variables
Money in general equilibrium
model. Tobin’s model. Sidrauski model of money in the utility
function (MIU), Clower cash-in-advance (CIA) model. Monetary
neutrality and superneutrality, clasical dichotomy under flexible
prices.
Modeling money and output in
the short-run. Model of monopolistic competition with sticky
prices and/or wages. Staggering and partial adjustment.
Money in open economy. Obstfeld
– Rogoff model.
Monetary policy with assymetric
information. Credit channel of monetary policy
Discretionary monetary policy
and inflation. Barro – Gordon model. Inflationary bias. Solutions
to inflationary bias.
Interest rates and monetary
policy. Price level determinacy under interest rate rule. Term
structure of interest rates.
