10645-01: Monetary Theory

Topic

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.

Information


Professor	Aleksander Berentsen [ contact \| teaching \| cv ]
Assistent	Oliver Sigrist [contact]
Lecture	Wednesday 08.15-12.00
Room	S14 On May 15th the lecture takes place in room S14, Economics Department
Start date	February 27, 2013

Announcements

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.

Slides

23.02:	Introduction & The Basic Environment (Chapter 0 & Chapter 1)
08.03:	Pure Credit Economies (Chapter 2)
15.03:	10:15 - 13:00: Money in Equilibrium (Chapter 4: extended version) 13:15 - 14:00: Exercise set 1 (Credit Economies) (Credit Economies Solutions) [update 25.04.12]
22.03:	10:15 - 11:00: Exercise set 2 (Money in Equilibrium) (solutions to exercise set 2) 11:15 - 14:00: Money in Equilibrium
29.03:	10:15 - 11:00: Exercise set 2 (Money in Equilibrium) (solutions to exercise set 2) 11:15 - 14:00: Money in Equilibrium
05.04:	Easter break
12.04:	Monetary Policy, the Friedman rule, and the cost of inflation (Chapter 6)
19.04:	10:15 - 11:45: Monetary Policy, the Friedman rule, and the cost of inflation, distribution of the papers for the presentations 12:30 - 14:00: Exercise set 3 (Search Externalities, Hot-Potato Effect), solutions to Exercise set 3 (Search Externalities [update 23.04.12], Hot-Potato Effect), additional reading.
26.04:	10:15-12:00: Exercise set 3 (Hot-Potato Effect) Discussion of questions regarding all exercises. Ideally, you contact one of the teaching assistants by e-mail with problems you want to discuss beforehand.
03.05:	Written exam (one hour) from 11:00-12:00, room S13 WWZ. Written exam and presentation count each with 50% for the final grade.
11.06,13.06:	Presentations of individual papers. Schedule

Additional material:

Introduction to Dynamic Programming (Envelope Theorem).
List of papers

Literature

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: