95864 - MONETARY ECONOMICS: THEORY OF MONEY AND LIQUIDITY

Course Unit Page

SDGs

This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

Quality education Decent work and economic growth

Academic Year 2021/2022

Learning outcomes

Monetary policy has the ability to shape all economic interactions in a way that no other policy does. However, the recent experience of the Great Recession has raised questions in monetary policy surrounding the limits to this power. At the same time, the development of financial markets and institutions have questioned the definition of “money” and inspired new methods and policies to address these challenges. Within the area of contemporary monetary economics and monetary policy, students will learn the transmission mechanism of monetary policy in a market based economy, the role played by market liquidity and sovereign debt, the policy tools of quantitative and qualitative easing, and will acquire a deep understanding of the policy issues in the Euro Area.

Course contents

Monetary aggregates and the Money multiplier

Behind the Scenes

  • Money creation in the modern economy
  • Banks and Liquidity Creation

    The Monetary Transmission Mechanism, and the role of risk:

  • Theory
  • The “broken transmission mechanism”: Evidence from

    the great financial crisis

    the sovereign debt crisis

    Financial Deepening:

  • Households’ money: bank debt
  • Cash pools’ money: sovereign debt and triple A securities
  • Nowadays interbank/money market: Repo Market
  • Government debt securities as “quasi money”: Theory and evidence

    Central Banks’ Policies

  • From inflation targeting to (full) employment targeting
  • Nowadays intermediate target: financial markets’ stability

Focus: From Quantity Easing to Qualitative Easing: Japan, USA, ECB

Readings/Bibliography

All the material is on the "Virtual Learning” platform.

There are 10 sections providing the material for the 10 lectures. In each section you find a file "Instruction" that provides a guideline of the material in that section.

Lectures are meant to be interactive, please read the material of the section before the lecture.

Teaching methods

Lectures in class, discussion of financial events

Assessment methods

The final score results from:

• Homeworks during the course (40% ) ,

• A written term paper, either theoretical or empirical, on a topic connected to the course and agreed with the lecturer (60%)

The term paper can possibly be the basis for the final exam's thesis

Teaching tools

Slides, PC

Websites of financial press -- Financial Times, Bloomberg, The Economist

"Virtual Learning” platform: 10 sections providing the material for the 10 lectures. Each section contains a file "Instruction" that provides a guideline of the material in that section.

Lectures are meant to be interactive, please read the material of the section before the lecture.

Office hours

See the website of Gabriella Chiesa