Liquidity crises, once again, are causing great concern. In this lecture, we will be asking what function liquidity fulfills in a modern economy. We will be looking at the kind of frictions that make money essential and discuss the advantages of having fiat money in contrast to other or none media of exchange. On this basis, we will discuss various micro- and macroeconomic aspects of monetary theory and monetary policy.
- The schedule for the presentations is online. They take place on June 11 and 13. Schedule
- The written exam takes place on May 03, 11:00 - 12:00 (sine tempore), room S13 WWZ. Bring along a calculator. You may use a dictionary.
- Remark (23.04.12): In the exercise set on search externalities, there was a mistake in task i). Instead of differentiating n(1-n), by mistake n/(1-n) was differentiated. The updated version can be downloaded below.
- Remark (25.04.12): Below, you can find an updated version of the exercise set on credit economies. In addition to minor changes, Exercise 2a) and Figure 2 in the solutions have been changed.
Pure Credit Economies (Chapter 2)
10:15 - 13:00: Money in Equilibrium (Chapter 4: extended version)
11:15 - 14:00: Money in Equilibrium
10:15 - 11:00: Exercise set 2 (Money in Equilibrium) (solutions to exercise set 2)11:15 - 14:00: Money in Equilibrium
Monetary Policy, the Friedman rule, and the cost of inflation (Chapter 6)
10:15 - 11:45: Monetary Policy, the Friedman rule, and the cost of inflation, distribution of the papers for the presentations
Written exam (one hour) from 11:00-12:00, room S13 WWZ.
Written exam and presentation count each with 50% for the final grade.
Presentations of individual papers. Schedule
The course consists of two parts: a lecture and the study of individual papers. The lecture is based on the book "Money, Payments, and Liquidity" by Ed Nosal from the Federal Reserve Bank of Chicago and Guillaume Rocheteau from the University of California-Irving, MIT-Press.
The Lagos-Wright Model:
- Lagos, R., and R. Wright. "A Unified Framework for Monetary Theory and Policy Analysis." Journal of Political Economy, 113 (Jun., 2005), 463-484.
The BCW Model:
- Berentsen, A., G. Camera, and C. Waller. "Money, Credit and Banking." Journal of Economic Theory, Vol. 135, No. 1, Pages 171-195.
Individual papers: to be announced
Letzte Änderung: 14.01.2013