Prerequisites: Intermediate macroeconomics and multivariate calculus
Dr Gianluca Benigno
Dr Kevin Sheedy
How does the recent financial turmoil affect the economy? What are the causes of inflation and deflation? Why do some countries experience sharp swings in exchange rates? What should central banks do in such circumstances? In order to answer these and related questions, this course provides a set of tools to analyse the interaction between monetary policy, the real economy and the financial sector. The course will combine a study of the relevant theory with applications to recent events and policy debates.
Topics to be covered include:
The transmission mechanism of monetary policy
Monetary policy strategies
The liquidity trap and policy responses: quantitative easing, credit easing, and other unconventional policies
Fiscal and monetary policy linkages: government debt and inflation risks
Banking and financial intermediation
Current account dynamics
Exchange rates and currency crises
Policy responses to the financial crisis.
(suggested references; the course will be based on lectures notes)
Walsh (2003), Monetary Theory and Policy, MIT Press.
Obstfeld & Rogoff (1996), Foundations of International Macroeconomics, MIT Press.
Lectures: 36 hours Classes: 12 hours
Assessment: Two written examinations