Monetary Theory (10645-01, Master, 6 KP, block week)
Following the onset of the financial crisis, liquidity shortages caused great concern. Meanwhile, excess liquidity has become a challenge. 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 consider the role of credit and financial intermediation in the economy. On this basis, we will discuss various micro- and macroeconomic aspects of monetary theory and monetary policy.
- For those interested in this class, in order to stay up to date, please send an email to Florian Madison at your earliest convenience.
- I would like to encourage every student to purchase the book "Money, Payments, and Liquidity" (2nd ed) by Guillaume Rocheteau and Ed Nosal prior to the block week.
Dr. Florian Madison [contact]
Romina Ruprecht [contact]
Lecture: February 12-16, 2018 (block week - all day)
WWZ S13 - HG.35
Applications for this course need to be sent to florian.madison-at-unibas.ch by February 14, 2018. As soon as you are admitted to the course, you have to enrol in MOnA.
09:00-12:00: Introduction: Liquidity in Macroeconomics
14:00-16:00: Baseline Environment
16:00-18:00: Pure Credit Economies
09:00-12:00: Pure Credit Economies
14:00-18:00: Shi-Trejos-Wright: A Second Generation Monetary Model
09:00-12:00: Exercises I
14:00-18:00: Lagos and Wright: A Third Generation Monetary Model
09:00-10:30: Lagos and Wright: A Third Generation Monetary Model
10:30-12:00: Monetary Policy, the Friedman Rule, and the Cost of Inflation
14:00-18:00: Exercises II
09:00-12:00: Monetary Policy, the Friedman Rule, and the Cost of Inflation
14:00-16:00: Exercises III
16:00-18:00: Q&A / Presentation Assignment
Written Exam - 10:00-11:30 AM (room tbd)
Presentations of individual papers (participation is mandatory)
*preliminary and subject to changes.
- Kiyotaki and Wright: A First Generation Monetary Model
- Introduction to Dynamic Programming (Envelope Theorem).
The lecture is based on the book "Money, Payments, and Liquidity" (2nd ed) by Guillaume Rocheteau from the University of California-Irvine and Ed Nosal from the Federal Reserve Bank of Chicago, MIT-Press.
Stephen Williamson and Randall Wright discuss the foundations of New Monetarist Economics in two articles worth reading:
An impeccable overview over the whole field was recently published by Ricardo Lagos, Guillaume Rocheteau, and Randall Wright in the Journal of Economic Literature:
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.
Randall Wright: http://www.ssc.upenn.edu/~rwright/
NBER homepage: http://www.nber.org/
JSTOR homepage: http://www.jstor.org/cgi-bin/jstor/listjournal