Monetary Economics and Aggregate Fluctuations

This information is for the 2021/22 session.

Teacher responsible

Dr Kevin Sheedy and Dr Cristiano Cantore


This course is available on the MSc in Econometrics and Mathematical Economics, MSc in Economics and MSc in Economics (2 Year Programme). This course is available with permission as an outside option to students on other programmes where regulations permit.


Students must have completed Introductory Course in Mathematics and Statistics (EC400).

In exceptional circumstances, students may take this course without EC400 provided they meet the necessary requirements and have received approval from the course conveners (via a face to face meeting), the MSc Economics Programme Director and their own Programme Director. Contact the Department of Economics for more information ( regarding entry to this course.

Course content

The course aims to develop the student's ability to undertake research in macroeconomics by studying a number of current issues both theoretical and applied.

We begin by studying money’s role as a medium of exchange and the determination of the price level using money-in-the-utility-function and cash-in-advance models. We then look more carefully at the reasons for holding money by applying search theory. We also study money’s role as a unit of account and the consequences of nominal rigidities such as sticky prices. We analyse the costs of inflation and optimal monetary policy, and we also look at unconventional monetary policies when a central bank is constrained by the interest-rate lower bound. Finally, we study firms’ price-setting behaviour in more detail and its implications for the size of the real effects of monetary policy. We also discuss economists use to understand the causes and consequences of business cycles and how government policies can affect them.


20 hours of lectures and 10 hours of seminars in the MT. 20 hours of lectures and 10 hours of seminars in the LT.

This course is delivered through a combination of classes and lectures totalling a minimum of 60 hours across Michaelmas Term and Lent Term. This year, some or all of this teaching will be delivered through a combination of virtual classes, live streamed (recorded) lectures, and some flipped content delivered as short online videos

Formative coursework

Two marked assignments per term.

Indicative reading

A reading list will be handed out by the lecturers at the beginning of their sessions.


Exam (50%, duration: 2 hours, reading time: 15 minutes) in the summer exam period.
Essay (50%, 6000 words) in the ST.

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Important information in response to COVID-19

Please note that during 2021/22 academic year some variation to teaching and learning activities may be required to respond to changes in public health advice and/or to account for the differing needs of students in attendance on campus and those who might be studying online. For example, this may involve changes to the mode of teaching delivery and/or the format or weighting of assessments. Changes will only be made if required and students will be notified about any changes to teaching or assessment plans at the earliest opportunity.

Key facts

Department: Economics

Total students 2020/21: 33

Average class size 2020/21: 17

Controlled access 2020/21: Yes

Value: One Unit

Guidelines for interpreting course guide information