Monetary Theory (10645-01, Master, 6 KP)
Announcements
- 10.04.2019: Lecture slides, exercise sets, literature, and presentation guidelines are now readily available on ADAM.
Topic
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. On this basis, we will discuss various micro- and macroeconomic aspects of monetary theory and monetary policy.
Schedule
| Date | Room | Time/ Topic |
|---|---|---|
03.05. | S14 HG.32 | 09:00-12:00: Introduction: Liquidity in Macroeconomics 14:00-16:00: Baseline Environment 16:00-18:00: Pure Credit Economies I |
04.05. | S14 HG.32 | 09:00-12:00: Pure Credit Economies II 14:00-18:00: Exercises I |
10.05. | S3 HG.37 | 09:00-12:00: Shi-Trejos-Wright: A Second Generation Monetary Model 14:00-18:00: Exercises II |
11.05. | S15 HG.31 | 09:00-12:00: Lagos and Wright: A Third Generation Monetary Model I 14:00-18:00: Lagos and Wright: A Third Generation Monetary Model II |
17.05. | S14 HG.32 | 09:00-12:00: Exercises III 14:00-18:00: Monetary Policy, the Friedman Rule, and the Cost of Inflation I |
| 18.05. | S14 HG.32 | 09:00-10:30: Monetary Policy, the Friedman Rule, and the Cost of Inflation II 10:30-12:00: Exercises IV 14:00-15:30: Exercises IV 15:30-18:00: Q&A / Presentation Assignment |
| 24.05 | S15 HG.31 | 14:15-15:45: Written Exam |
| 07.06/ 08.06 | S14 HG.32 | Presentations of individual papers (participation is mandatory) |
*preliminary and subject to changes.
Additional material:
- Introduction to Dynamic Programming (Envelope Theorem).
Literature
The lecture is based on the book "Money, Payments, and Liquidity" (2nd ed, MIT Press) by Guillaume Rocheteau from the University of California-Irvine and Ed Nosal from the Federal Reserve Bank of Chicago.
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.
Seminar
In the seminar, students will present a paper at the research frontier of monetary theory. The final grade is a weighted average of exam and presentation. Participation is mandatory for the entire seminar.
Links
Randall Wright: http://www.ssc.upenn.edu/~rwright/
NBER homepage: http://www.nber.org/
JSTOR homepage: http://www.jstor.org/cgi-bin/jstor/listjournal