Monetary Theory and Policy (EC0072)

? Credit Points : 20 ? SCQF Level : 10 ? Acronym : MSE-4-MTHPOL

Money plays an essential role in modern economies, but this essential role is not well-captured in standard macro models, which typically tack money on in a more or less arbitrary ad hoc way to a barter model of a competitive economy. The early part of the course takes a closer look at the role of money and the problem of how to model it seriously and, in the process, raises more general issues about the nature of economic models and how to interpret them. All this might sound like an arid and highly abstract academic exercise, but it is not. The limitations of standard models of money have an important bearing on practical and topical policy issues, which are the focus of the latter part of the course. The treatment of policy will focus primarily on the monetary policy framework, which has been at the centre of recent policy discussions among academics and practitioners. We will consider aspects of: the interplay between monetary and fiscal policy; monetary policy games, credibility and reputation; central bank independence; and monetary policy operating procedures. The course essay and teamwork mini-project provide opportunities to broaden the topics covered in class and/or explore topics in greater depth. Visiting undergraduate students, interested in taking the course, should consult the course instructor. Much of the reading for the course is advanced, taken from journal articles and graduate level textbooks. The course is aimed at the serious student, who is willing to grapple with difficult material, that is the focus of ongoing research activity. The reward, for those who grapple, is insight into important issues in monetary economics, including recent and current research activity and policy debates.

Entry Requirements

? Pre-requisites : Topics in Economic Analysis 1

Variants

? This course has variants for part year visiting students, as follows

Monetary Theory and Policy (VS1) (Semester 1 (Blocks 1-2))

Subject Areas

Home subject area

Economics, (Management School and Economics, Schedule H)

Delivery Information

? Normal year taken : 4th year

? Delivery Period : Semester 1 (Blocks 1-2)

? Contact Teaching Time : 2 hour(s) per week for 10 weeks

First Class Information

Date	Start	End	Room	Area	Additional Information
18/09/2007	14:00	15:50	Tutorial Room M3, Appleton Tower	Central

All of the following classes

Type	Day	Start	End	Area
Lecture	Tuesday	14:00	15:50	Central

Summary of Intended Learning Outcomes

After successful completion of this course students will have an understanding of and insight into key fundamental problems in monetary theory (notably the difficulty of designing a tractable model of money which adequately captures its role as a medium of exchange and provides a sound basis for understanding the interrelations between money, inflation, growth and welfare) and more immediately practical issues relating to the design of the monetary policy framework (notably the interplay between monetary and fiscal policy; monetary policy games; central bank independence; and monetary policy operating procedures).
The course uses and builds on the technical skills developed in Topics in Economic Analysis 1. Students are expected to develop a rigorous understanding of relevant models, an ability to use and apply them to analyse policy issues, and a critical appreciation of the limitations of existing models and approaches.
The course highlights key intellectual skills, notably: problem-framing and problem-solving skills; critical analysis and assessment; independent thought and critical judgment; and obtaining and processing information from a variety of sources. These are emphasised, in particular, by the substantial essay and teamwork components of assessment. The teamwork element also highlights interpersonal and group skills, as well as involving an oral presentation.