70575 - Central Banking and Monetary Policy

Learning outcomes

This course studies the purpose and the functions of central banks and monetary policies and how they have evolved over time. Students are introduced to the tools of monetary policy and to the rules that central banks follow, with special attention to inflation targets. At the end of the course students know the effects of the main policy tools and understand how central banks affect the financial system and the economy more generally and the role they have played in the recent financial crisis.

Course contents

Readings/Bibliography

Required readings:

Cecchetti, S. and Schoenholtz (2017) “Money, Banking and Financial Markets”, McGraw-Hill Education International Edition, Fifth Edition.

Suggested readings:

Svensson, L.E.O. (1999). "Inflation targeting as a monetary policy rule," Journal of Monetary Economics, Elsevier, vol. 43(3), pages 607-654, June.

ECB (2011) The monetary policy of the ECB, published online at: https://www.ecb.europa.eu/pub/pdf/other/monetarypolicy2011en.pdf?4004e7099b3dcdbf58d0874f6eab650e

Krugman, P., Obstfeld, M. and M. Melitz (2018) “International Economics: Theory and Policy” (11^th edition), Pearson. Chapters 15, 18, 20.

Additional material, as a source for preparing the final papers for evaluation, will be made available on Moodle.

Teaching methods

The course will be delivered through a mix of face-to-face lectures, class discussions on the basis of case studies, and presentation of short videos to stimulate discussion in the classroom.

Assessment methods

Student assessment will be based on active participation in the class and on submitting an individual project during the exam session.

Participation in class will count for 10% of the grade. What will count for this purpose will not be so much the presence in the classroom as the participation during the theory lessons and above all the case studies, for which short readings will be given to students before the lessons so as to favour the preparation and stimulate the debate. The maximum grade for this part is 30.

18-20: participation in class is generally passive or only due to the request of the teacher, and in general with superficial or imprecise arguments.

21-24: active participation in most of the lessons, with a limited level of critical analysis and with some knowledge of the readings indicated before the lesson.

25-28: active participation in most of the lessons, with a good level of critical analysis and good command of terminology.

29-30: active participation in most of the lessons. The student shows the ability to make autonomous choices of critical analysis and connection, full command of terminology and ability to argue and self-reflection.

The individual project will count for 90% of the grade and will demonstrate the student's ability to have assimilated the contents of the course, to apply them to monetary policy according to real case studies, and to use the necessary tools to transmit their knowledge in a correct, clear and comprehensive way.

Each student will be assigned a different topic. The papers delivered by the students must (i) be entirely typewritten, including any formulas and graphs; (ii) respect the assigned topic: the assignment will be made on a first come - first serve basis; (iii) the final project may take the form of an essay, briefing or report: instructions will be provided; (iv) the papers must be original and explicitly refer to topics covered during the lectures. Papers that are partially or wholly taken from other sources will lead to rejection. In case of repetition of the exam, the student will have to carry out the final project on a different topic.

Attending classes is not compulsory, but very useful for passing the exam with a good grade. During the lessons, questionnaires (without grades) will also be carried out to better prepare students.

The maximum score that can be obtained by producing a correct, well-written, complete paper that meets the indicated requirements is equal to 30 cum laude. The test is passed with a minimum score of 18/30. The final grade will follow the following evaluation grid:

18-19: the paper is globally correct but superficial, and some topics are not (sufficiently) covered. It is expressed in an overall correct language, the requirements in terms of formatting, graphics, length etc. are not fully respected.

20-24: The paper covers all required topics, but has a limited level of critical analysis.

25-29: The paper reports all the required topics, with a good level of critical analysis, mastery of specific terminology and compliance with stylistic requirements.

30-30L: the paper reports in an exhaustive way the topics addressed. The student shows the ability to make autonomous choices of critical analysis and connection, full mastery of specific terminology and capacity for argumentation and self-reflection, and complete compliance with stylistic requirements.

Teaching tools

The course will take place in face-to-face mode, using as support the use of powerpoint presentations, videos, online questionnaires and readings from the specialized press.

Office hours

See the website of Gaetano D'Adamo