Advanced Monetary Economics
- to present the main current macroeconomic problems
- describe the role of central banks in the economy
- introduce the students to the standard analytical methodology that figures out the optimal monetary policy measures
- understand the role of monetary policy for output, inflation and exchange rate determination, the difference between monetary policy regimes, the causes and features of financial crises in the modern economy, the opportunities and feasibilities of stabilization policy
- be able to analyze financial and monetary data, apply the macroeconomic tools for the analysis of monetary sphere
- be able to acquire the necessary skills to discuss different macroeconomic problems, the monetary authorities’ actions and decisions, the consequences of monetary policy changes for the economy
- Lecture 1. Introduction. The concept of moneyThe concept of money. Money demand. Money supply. Empirical evidence on the links between money, output, inflation and other economic variables. Monetary policy operating procedures. Monetary policy regimes.
- Lecture 2. The classical monetary modelsMoney neutrality in RBC models. Classical monetary models. Money in the utility function models. Cash-in-advance models. Comparison of the models’ predictions and the empirical evidence.
- Lecture 3. The basic New Keynesian ModelThe main blocks of the model: representative household, firms, monetary policy rule. Monopolistic competition and price stickiness. Extensions with other possible nominal rigidities. The discussion of the New-Keynesian models: simplicity versus realism.
- Lecture 4. Monetary policy design in New Keynesian modelsMonetary policy instruments. Money supply rules versus interest rate rules. The problem of determinacy. The overview of the practice of monetary policy among central banks in advanced economies.
- Lecture 5. The optimal monetary policyThe social welfare function in the New Keynesian model. Optimal policy rules. Policy tradeoffs: inflation-output tradeoff and stabilization bias. Time inconsistency of the optimal policy. Discretion versus commitment.
- Lecture 6. Monetary policy at zero-lower boundThe New-Keynesian model extension: ZLB constraint. The origins of liquidity traps. Effective lower bound. Conventional monetary policy at ZLB. Unconventional policies: forward guidance, quantitative and qualitative easing. The evidence of monetary policy effectiveness in advanced countries at ZLB.
- Lecture 7. Monetary policy under uncertaintyThe types of uncertainty: additive uncertainty, multiplicative uncertainty, model uncertainty. Robust monetary policy. Attenuation effect. The role of information policy under uncertainty.
- Lecture 8. Communication policy of a central bankInformation as a policy tool. The overview of central banks communication. The optimal design of communication policy. Communication policy at ZLB and during financial crises.
- Lecture 9. Monetary policy in an open economyA two-country New Keynesian model. A small open economy. The optimal exchange rate policy. Optimal monetary policy rules in an open economy. Currency unions.
- Lecture 10. Financial markets and monetary policyThe term structure of interest rates. Financial frictions in credit markets. The monetary policy effects on yield curve.
- Attendance (неблокирующий)Previous experience has shown that the average mark is usually higher for the students who actively participate in sessions. Lectures will be interactive with discussions between the lecturer and students. Questions and comments are welcome during the lectures.
- Short quizzes (неблокирующий)Short quizzes are based on topics covered in the class. No possibility is given to complete the missed quizzes.
- Mid-term written exam (неблокирующий)The mid-term exam will cover the topics of the first half of the course. The students absent from the mid-term exam get a zero mark for it unless the absence is excused. The written documentation for the excuse is to be presented to the Students’ Office in accordance with the HSE’s rules.
- Exam (неблокирующий)The final exam will cover the topics of the course. The students absent from the final exam get a zero mark for it unless the absence is excused. The written documentation for the excuse is to be presented to the Students’ Office in accordance with the HSE’s rules.
- Промежуточная аттестация (4 модуль)0.4 * Exam + 0.4 * Mid-term written exam + 0.2 * Short quizzes
- Jordi Galí. (2015). Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications Second edition. Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.pup.pbooks.10495
- Monetary theory and policy, Walsh C. E., 2003
- Woodford, M., & Friedman, B. M. (2011). Handbook of Monetary Economics. Amsterdam: North Holland. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=365565