93286 - Economics and Monetary Policy

Academic Year 2023/2024

  • Teaching Mode: Traditional lectures
  • Campus: Bologna
  • Corso: First cycle degree programme (L) in Economics, Markets and Institutions (cod. 8038)

Learning outcomes

The course aims to provide the student with the basic tools to understand the role of monetary policy in the economy. At the end of the course the student is expected to have acquired the ability to:

- understand the most important theoretical models of monetary economics

- analyze and evaluate the monetary policy choices of the Central Bank.

Course contents

1. Money in macroeconomics
1a. Macroeconomics topics.Dichotomy and neutrality of money in the neoclassical model.Monetary and fiscal policies in the IS-LM model;

1b. Nature and functions of money. Legal and fiduciary money. Notes on private coins and cryptocurrencies. Wholesale payments system.

1c. Expectations, inflation and money market dynamics. Money market dynamics with  adaptive expectations and perfect foresight. Anticipated and unanticipated monetary policies.

1d. Demand for money. The demand for money in Keynes. Liquidity trap. Conventions and instability of financial markets. Transaction money (Baumol-Tobin), precautionary and speculative money (Tobin). Friedman and the monetarist counterrevolution.

2. Money markets and the Central Bank

2a. Open market operations; bank reserves; standing facilities; interbank rates and policy rates.

2b. Term structure of interest rates. Policy rates and short and long term market rates.

2c. Monetary policy with market frictions. Monetary policy and bank rates. Transmission of monetary policy: interest rate channel and credit channel. Credit rationing.

2d. Objectives, operational strategies of the European Central Bank.

3. Monetary policies

3a. The theroretical and institutional framework. Rules and discretion.  Inflation bias and output stabilization. Central Bank Independence.

3b. The Italian experience of the 70s-80s.

3c. The financial crisis of 2007.

3d. The sovereign debt crisis in the Euro area.

3e. Quantitative Easing and other unconventional central bank  strategies.

3f. Pandemic crisis. Current monetary policy choices.


Lecture notes by the teacher.

A useful reference text is:

S. Cesaratto, 2021, Six lessons on money, Diarkos.


Further readings (selected chapters):

P. Alessandrini, 2021, Economics and politics of money, il Mulino.

F.C. Bagliano and G. Marotta, Monetary Economics, il Mulino latest ed.

Further bibliographical and website suggestions will also be provided during the lectures.

Teaching methods

Frontal lessons

Assessment methods

The exam is aimed at assessing the level of knowledge of the theoretical tools presented during the lessons and the ability to analyze the concrete problems of monetary policy using these tools.

Learning is assessed through a compulsory total written test or through two compulsory intermediate tests. The partial tests will be carried out following the schedule established by the School of Economics and Management.

The grade for each test is expressed in thirtieths. The duration of each test is 2 hours. The test consists of open-ended questions.

Each intermediate test weighs 1/2 of the overall grade.

The evaluation of the written tests will follow the following grid:
Insufficient preparation and analytical capacity: rejected.
Sufficient preparation and analytical skills, expressed in formally correct language: 18-22
Adequate preparation, sufficient analytical ability, even if not particularly articulated, expressed in correct language: 23-26.
In-depth knowledge of the topics addressed in the course, good analytical and critical skills, mastery of specific terminology: 27-29.
Very in-depth knowledge of the topics addressed in the course, critical analysis and connection skills, mastery of specific terminology: 30-30L.

It is not possible to use books, notes or digital or electronic equipment during the exams.

Registration for the exam is mandatory. Students must register through AlmaEsami according to the general rules of the School of Economics and Management; in case of difficulty in registering it is necessary to consult the CESIA Help Desk.
The publication and recording of the votes takes place via Almaesami. Registration normally takes place 4 days after the publication of the votes.

Requests to view the exam paper and in relation to any other problems are made via an email addressed to the teacher.

Students whose grade in the first intermediate test is at least 27/30 can replace the second partial test with a paper on a topic to be agreed upon and delivered to the teacher at least three days before the scheduled date of registration of the results of the written test.

The student who achieves a positive evaluation (greater than 18/30) can refuse the grade once, by giving written notice at least two days before the scheduled date of registration of the results of the written test. The registration of the rejected grade occurs according to the procedures established by the University.

Teaching tools

Slides, handouts and papers taken from specialized journals and economic-financial publications.

Office hours

See the website of Antonello Eugenio Scorcu