Monetary Economics

EMEC055H7 (15 credits)

Lecturer: various lecturers (Spring 2013)

The Monetary Economics option will run in Spring 2013. The course will be based on Peter Tinsley's outline but will be presented by the following lecturers:

• Anne Sibert (lectures 1 & 2)
• Stephen Wright (lectures 3 to 5)
• Ivan Petrella (lectures 6 & 7)
• John Driffill (lectures 8 to 10)

Aims

This option provides an analytical survey of changes in academic and central bank views regarding monetary economics, macro finance and monetary policy in developed countries over the last few decades, including the evolution of policy from money growth targeting in the 1970s to modern variants of inflation targeting. Topics include: transformations of banking and credit markets; intersections of macroeconomics and finance including market perceptions of central bank policy; empirical support for models advanced to illustrate successes and failures of historical monetary policies; and proximate causes of and central bank responses to the credit crisis that began in mid-2007.

Abbreviated course outline & handouts

1. Money, inflation, and cycles.
2. Hyperinflation, policy coordination, and fiscal sustainability.
3. Leverage, liquidity and the fragility of banks.
4. Determinants of credit risk spreads.
5. Consumption-based asset pricing.
6. Models of output dynamics.
7. The term structure and anticipated policy.
8. New Keynesian models of sticky pricing.
9. Designs of monetary policy.
10. Constraints on monetary policy.