Dr Kevin Sheedy 32L1.09

Professor Charlie Bean 32L 1.18

This course is available on the BSc in Business Mathematics and Statistics, BSc in Econometrics and Mathematical Economics, BSc in Economics, BSc in Economics and Economic History, BSc in Economics with Economic History, BSc in Government and Economics, BSc in Mathematics and Economics, BSc in Philosophy and Economics, BSc in Philosophy, Politics and Economics and BSc in Social Policy and Economics. This course is available with permission as an outside option to students on other programmes where regulations permit and to General Course students.

Students should have completed Microeconomic Principles I (EC201) or Microeconomic Principles II (EC202) or equivalent and Macroeconomic Principles (EC210) or equivalent. Introduction to Econometrics (EC220) or Further Mathematical Methods (MA212) or equivalent are also strongly recommended. Students who have not taken either of these two courses are still welcome provided they can show other evidence of a strong quantitative background.

The course provides an introduction to monetary theory, to the effects of monetary variables on the macroeconomic system, the role of the Central Bank and the conduct of monetary policy. Subjects covered include: The nature and function of money. Classical monetary theory, neutrality and inflation. Interest-rate feedback rules. Theories of the demand for money. The banking system, financial intermediation and the determinants of the money supply. The transmission mechanism of monetary policy, including theories of nominal rigidities and the Phillips curve. The term structure of interest rates. The theory and practice of monetary policy and the design of optimal policies. Monetary policy strategies, including inflation targeting. Policymaking in an uncertain environment. The interaction between monetary and fiscal policy and the arguments for Central Bank independence. Financial crises and the role of the central bank as a lender of last resort. The 2007-8 financial crisis. The interest rate zero lower bound and unconventional monetary policy‎, including quantitative easing and forward guidance.

15 hours of lectures and 10 hours of classes in the MT. 15 hours of lectures and 10 hours of classes in the LT.

Two hours of revision lectures will be held in week 11 of both MT and LT.

Students are required to submit two essays or exercises in the MT and the LT. Feedback is provided on these by the class teacher.  

The most useful text books are M Lewis & P Mizen, Monetary Economics, and C Walsh, Monetary Theory and Policy 3rd edn. Other useful texts include: C Goodhart, Money, Information and Uncertainty, 2nd edn; D Laidler, The Demand for Money, 3rd edn; A Blinder, Central Banking in Theory and Practice.

Exam (100%, duration: 3 hours) in the main exam period.