Course 2014-2015 a.y.



Department of Economics

Course taught in English

Go to class group/s: 31
CLEAM (6 credits - I sem. - OP  |  SECS-P/01) - BESS-CLES (6 credits - I sem. - OP  |  SECS-P/01) - BIEMF (6 credits - I sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (I sem.)

Course Objectives

This course goes into more depth in the analysis of monetary theory and policy introduced in the basic course of macroeconomics. The main objective of the course is to allow students to understand the behavior of central banks and the effects of monetary policy on the economy. After introducing and defining money, we discuss the conduct of monetary policy, describe the money supply process and compare the structure of monetary policy institutions and the tools of monetary policy at different central banks, such as the European Central Bank and the U.S. Federal Reserve. We then study theory and empirical evidence related to the effects of monetary policy on the economy and its transmission mechanisms. Then, we discuss the design of monetary policy and present a number of related issues, such as the time-inconsistency of monetary policy. We also develop a model of inflation targeting. Finally, after briefly discussing the causes of the 2007-2009 financial crisis and its real effects, we analyze the unconventional response of monetary policy in turbulent times and describe the monetary policy tools created during the crisis. We conclude with a discussion of the recent sovereign debt crisis in Europe and its relations to monetary policy. 

Simple analytical models are derived in class.

Course Content Summary

  • What is money?
  • The conduct of monetary policy at the Fed and the ECB and the creation of money.
  • The transmission mechanism of monetary policy: theory and empirical evidence.
  • The design of monetary policy.
  • Financial crisis and monetary policy.

Detailed Description of Assessment Methods

Examination is through a written exam and problem sets.


  • F.S. MISHKIN, K. MATTHEWS, M. GIULIODORI, The Economics of Money, Banking and Financial Markets, European Edition, Pearson, 2013.
  • Additional readings as specified in the program.
  • Handouts and slides are made available.
Exam textbooks & Online Articles (check availability at the Library)


Basic knowledge of differential calculus is required.
Last change 15/05/2014 11:17