MONETARY THEORY AND POLICY

The course addresses, at a medium-advanced level, some of the most important issues concerning the theoretical foundations of monetary analysis and the analysis of the interactions between the economic cycle, monetary policy and financial stability. Most of the topics will be studied through the development of simple dynamic models, in continuous or discrete time, but only fundamental notions of differential calculus and static optimization are considered necessary at the beginning of the course. Some lessons will be devoted to the institutional and operational set-up of monetary policy management and the action of central banks on banking and financial regulation and supervision, with particular attention to the recent developments of the Banking Union in Europe.

Microeconomics, Macroeconomics, Mathematics, Statistics. Recommended Monetary and credit economy.

understanding of macroeconomic dynamics; understanding of monetary policy choices; ability to analyze regulatory and supervisory issues in the financial system; ability to apply acquired knowledge to select savings and investment products.

1) Money and Monetary Economies: dynamic general equilibrium models with money References: Di Giorgio (2016): chapter 1. 2) Monetary policy in traditional models. Non linear IS-LM model, comparative statics and dynamic stability Monetary policy in the "classic" and "Keynesian" aggregate demand model References: Di Giorgio (2016): chapter 6 3) Monetary policy in models with rational expectations From adaptive to rational expectations. Monetary policy in models with imperfect information and nominal rigidities. The rules versus discretion debate References: Di Giorgio (chapters 7 and 9) Barro and Gordon (1983), Walsh (2003) Chapter 9. 4) The management of monetary policy and the transmission mechanism - monetary policy objectives and instruments: FED versus ECB - the transmission mechanism of monetary policy References: Di Giorgio, chapters 3 and 5 5) Monetary policy in the cycle Real business cycle models. The neokeynesian models and the "excellent" monetary policy The "excellent" monetary policy and the Taylor rules References: Di Giorgio, chapter 8. 6) The role of central banks in regulation and supervision Banking and financial regulation, supervision and monetary policy The new regulatory and supervisory architectures after the financial crisis and sovereign debts The Banking Union Macro-prudential regulation and supervision References: Di Giorgio: chapter 4

Di Giorgio G., Economia e politica monetaria, Cedam, Padova, most recent publication. Recommended readings.

lectures, team work and classroom discussions

problem sets will count up to 20% of the final grade if final taken in the first session. 30% of the result will be given by a written midterm and a written final will count for 50% and will be based on topics treated in class. Students who will not be able to pass the exam, will be allowed to retake it on the basis of the complete program that will be published in the first week of lessons.

Interest for the topics object of study