Prof Ricardo Reis 32L.1.27 and Dr Kevin Sheedy 32L.1.09

This course is available on the MPA in European Public and Economic Policy, MPA in International Development, MPA in Public Policy and Management, MPA in Public and Economic Policy, MPA in Public and Social Policy, 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 very 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 (econ.msc@lse.ac.uk).

The course aims to develop the student's ability to undertake research in monetary economics by studying a number of current issues both theoretical and applied. In the MT, we study open economy models with nominal rigidity to examine the impact of monetary and fiscal policies and their transmission across countries. We then study the prorogation of international financial shocks, as well as liquidity traps, forward guidance, and quantitative easing. The third part of the term focuses on basics of asset pricing theory in general equilibrium and models of the yield curve. In the LT, we discuss and answer five questions: (i) How can central banks control inflation? (ii) How can we measure agents’ inflation expectations? (iii) Can central banks become insolvent and how can they help during a fiscal crisis? (iv) How does monetary policy affect unemployment and real activity? (v) Why is central bank transparency important and how can policymakers use communication to steer the economy?

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

Two marked assignments per term.

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

Exam (25%, duration: 2 hours) in the LT week 0.
Exam (25%, duration: 2 hours) in the main exam period.
Essay (50%, 6000 words) in the ST.