Insegnamento a.a. 2015-2016



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. - OBCURS  |  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. Particular emphasis will be placed on studying the effects of monetary policy on labor market outcomes, such as the decision of firms to create jobs and hire new workers and the unemployment rate. 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. Here we emphasize the role of imperfections in both credit and labor markets. 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, we analyze the unconventional response of monetary policy in turbulent times and describe the monetary policy tools created during the recent financial 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?
  • What are the tools available to central banks to conduct monetary policy? How is monetary policy conducted at the Fed and the ECB?
  • What is the role of banks in the creation of money?
  • How is monetary policy transmitted to the economy? What are the effects on inflation, unemployment and output?
  • What are the features financial and labor markets that make them special, and how they interact with monetary policy and the rest of the economy?
  • How should central banks conduct monetary policy?
  • How has monetary policy in the US and Europe responded to the emergence of the liquidity trap and the financial crisis? How do quantitative easing, credit easing and other unconventional monetary policies work?

Detailed Description of Assessment Methods

Examination is through a written exam and problem sets. Students can take the exam as two partials or one general examination. Part of the grade is determined by the problem sets handed in during the course.


  • Selected chapters from:
  • F.S. Mishkin, K. Matthews, M. Giuliodori, The Economics of Money, Banking and Financial Markets, European Edition, Pearson, 2013.
  • S.D. Williamson, Macroeconomics, International Edition 5/E, Pearson, 2013.
  • G. Mankiw, Macroeconomics, Worth Publishers , 2010 , 8th Edition.
  • Additional readings as specified in the program.
  • Handouts, readings and slides will be made available.
Exam textbooks & Online Articles (check availability at the Library)


Basic knowledge of differential calculus is required.
Last change 27/03/2015 12:44