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- Code:
- ECOM-434
- Field:
- Macroeconomics
- Targets:
- Master’s students Research Master's students PhD students
- Organiser:
- University of Helsinki - Economics
- Instructor:
- Antti Ripatti
- Period:
- Period 3
- Format:
- Lecture
- Method:
- Contact teaching
- Venue:
- Economicum
- Enrollment:
In case of conflicting information consider the Sisu/Course/Moodle pages the primary source of information.
Aalto and Hanken economics students can enroll in their home university’s SISU! Further instructions can be found on the How to enroll page, also for other students.
Before taking and completing the course make sure that the credits can be counted towards your degree at your home university by checking which courses are included in your curriculum or by contacting your home university’s student/learning services.
Content
The goal of the course is to provide an introduction to monetary macroeconomics and the role of money and monetary policy in the economy. After describing what monetary macroeconomics is about, students will learn how the money supply is determined in the economy and how it changes. The course emphasizes price stickiness as the key factor underlying the short-run effectiveness of monetary policy. Different models are used to show how an economy can fall into a liquidity trap (zero lower bound) and what the potential measures are through which policy makers can try to lift an economy from the liquidity trap. The core of the course is optimal monetary policy. Different models also show how the time inconsistency of the optimal pre-commitment policy emerges when policy makers are dynamically optimising their policy choices and how the inflation and stabilisation bias bedevil optimal discretionary monetary policy. The aim of the course is to learn to use analytical tools to understand basic features of money and monetary policy from the point of view of the short-run macroeconomic equilibrium of an economy.
Learning outcomes
After the course, the student should
- Understand the role of the central bank in a fiat money system
- Be able to show how the supply of money is determined
- Be able to analyse the macroeconomic equilibrium of an economy using a standard New-Keynesian model
- Understand the problems related to zero lower bound of nominal interest rate and potential ways to take the economy out of them
- Be able to analyse optimal monetary policy using Kydland-Prescott, Barro-Gordon or New Keynesian monetary macromodels
- Understand the basic concepts of optimal monetary policy: discretion (re-optimisation), pre-commitment, time consistency, inflation bias, stabilisation bias