Money and Banking

  • Summer schools
  • Department of Economics
  • Application code SS-EC321
  • Starting 2020
  • Short course: Open
  • Location: Houghton Street, London

UPDATE: Due to the global COVID-19 pandemic we will no longer be offering this course in summer 2020. Please check our latest news on this situation here.  

You can still register your interest in this course for 2021 using the ‘Sign up’ button to the right.  

This course aims to bring you up to date with modern theories of money and banking and recent developments in the analysis of monetary policy.

What are the causes of inflation and deflation? What tools do central banks have, and how does monetary policy affect the economy? How do financial markets work, and why are financial intermediaries needed? In order to answer these and related questions, this course provides a set of tools to analyse monetary policy and the financial sector. The course will combine a study of the relevant theory with applications to recent events and policy debates.

Session: Three
Dates: 3 August – 21 August 2020
Lecturers: Dr Kevin Sheedy and Dr Shengxing Zhang


Programme details

Key facts

Level: 300 level. Read more information on levels in our FAQs

Fees:  Please see Fees and payments

Lectures: 36 hours 

Classes: 18 hours

Assessment*: Two written examinations

Typical credit**: 3-4 credits (US) 7.5 ECTS points (EU)

*Assessment is optional

**You will need to check with your home institution

For more information on exams and credit, read Teaching and assessment


Intermediate macroeconomics, intermediate microeconomics and differential calculus.

Programme structure

  • The transmission mechanism of monetary policy
  • The market for reserves and the instruments of monetary policy
  • Foundations of the demand for money
  • How monetary policy provides a nominal anchor: determination of the price level and inflation
  • Rules for interest-rate policy
  • Fiscal and monetary policy linkages: government debt and inflation risks
  • Nominal rigidities, the real effects of monetary policy, and the Phillips curve
  • Goals of monetary policy and optimal monetary policy
  • Rules versus discretion in monetary policy
  • Policymaking under uncertainty
  • Monetary policy at the interest-rate lower bound: forward guidance and quantitative easing
  • Financial market completeness and the value of the firm
  • Market liquidity and funding liquidity
  • Market liquidity and asymmetric information
  • Capital misallocation and TFP
  • Banking and financial intermediation
  • Asset bubbles
  • Demand and supply for safe assets

Course outcomes

This course aims to bring you up to date with modern theories of money and banking and recent developments in the analysis of monetary policy.


The LSE Department of Economics is one of the biggest and best in the world, with expertise across the full spectrum of mainstream economics. A long-standing commitment to remaining at the cutting edge of developments in the field has ensured the lasting impact of its work on the discipline as a whole. Almost every major intellectual development within Economics over the past fifty years has had input from members of the department, which counts ten Nobel Prize winners among its current and former staff and students. Alumni are employed in a wide range of national and international organisations, in government, international institutions, business and finance.

The Department of Economics is a leading research department, consistently ranked in the top 20 economics departments worldwide. This is reflected in the 2014 Research Assessment Exercise which recognised the Department's outstanding contribution to the field. According to the REF 2014 results, 56 per cent of the Department’s research output was graded 4 star (the highest category), indicating that it is 'world-leading'. A further 33 per cent was designated 'internationally excellent' (3 star).

On this three week intensive programme, you will engage with and learn from full-time lecturers from the LSE’s economics faculty.

Reading materials

A collection of readings will be supplied along with lecture notes in the course pack. There is no suitable textbook for the whole course, but Walsh (2017), Monetary Theory and Policy, 4th ed., MIT Press, may be consulted as a reference for some topics.

*A more detailed reading list will be supplied prior to the start of the programme

**Course content, faculty and dates may be subject to change without prior notice

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How to Apply

Related Programmes

Public Finance

Code(s) SS-EC270

The Political Economy of Public Policy

Code(s) SS-EC260

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