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European Monetary Economics

  • Course Information

    Lecturer:
    Bernd Hayo, Professor of Macroeconomics
    Course format:
    2 hours lecture + term paper
    Time and place:
    Please check the information on Marvin.
    Target group:
    Master students

  • Course Description

    The lecture introduces core aspects of monetary economics in a (primarily) closed economy context.
    The analyses make use of verbal, graphical and mathematical methods.
    Major topics are monetary theory and monetary policy.
    The theoretical exposition is complemented by empirical sections.
    It is expected that students prepare for the lectures and actively participate in the class room.

  • Syllabus

    1. Introduction: Defining Money
    1.1 Money functions
    1.2 Divisia index

    2. Money Supply
    2.1 The monetary base
    2.2 Currency
    2.3 Reserves
    2.4 The money multiplier
    2.5 Endogeneity of money supply

    3. Money Demand
    3.1 Classical approach
    3.2 Liquidity preference
    3.3 Inventory model for cash balances
    3.4 Broad wealth approach
    3.5 Utility maximisation
    3.6 Empirical money demand estimation

    4. Interest Rates
    4.1 Measuring types of interest rates
    4.2 The loanable funds theory of interest rates
    4.2 The structure of interest rates

    5. Monetary Policy in Europe
    5.1 Creating the European Monetary Union
    5.2 Institutional structure of the European Central Bank
    5.3 Justifying central bank independence
    5.4 Monetary policy strategy
    5.5 Monetary policy instruments in normal times
    5.6 Transmission of monetary policy impulses
    5.7 Monetary policy during times of crisis

  • Literature

    Easy:
    Gischer, H., B. Herz and L. Menkhoff (2012), Geld, Kredit und Banken, Heidelberg: Springer.
    Hubbard, G. (2008), Money, the Financial System, and the Economy, 5th edition, Boston: Addison Wesley.
    Mishkin, F. (2012), The Economics of Money, Banking, and Financial Markets, 7th edition, Boston: Addison Wesley.

    Medium:
    Bofinger, P. (2001), Monetary Policy, Oxford: Oxford University Press.
    Issing, O. (2003), Einführung in die Geldtheorie, 13th edition, München: Vahlen.

    Difficult:
    Eden, B. (2005), A Course in Monetary Economics, Oxford: Blackwell.
    Walsh, C. (2010), Monetary Theory and Policy, 2nd edition, Cambridge: MIT Press.

    → More references given in the slides during the lecture.

  • Evaluation