The course begins by considering the goals of monetary policy, in the context of developed and developing countries. Contemporary macroeconomic theory is used to define what is achievable through monetary policy. The course then considers the instruments available to the monetary authorities to achieve these aims, and assesses the relative merits of these approaches to the implementation of monetary policy. In doing so, we also explore the use of unconventional monetary policies following the financial crisis. Next we examine the monetary transmission mechanism. The course concludes by looking at issues in the design of optimal monetary policy institutions, at the time-inconsistency problem and at the desirability of inflation targeting and/or an independent central bank.

A 2-hour lecture each week for 10 weeks.

■ Coursework: essay (25% of final grade for course)

■ Examination: two-hour in-person degree exam (75% of final grade for course).

The main aims of the course are to:

■ outline the goals of monetary policy;

■ review the instruments available to central banks for the achievement of these goals;

■ give an overview of the implementation of monetary policy in practice; and

■ consider a number of issues relating to the optimal design of monetary policy institutions and the conduct of monetary policy.

By the end of this course, students should be able to:-

■ outline and give a detailed justification of the main goals of monetary policy;

■ evaluate the ability of different monetary policy instruments to achieve these goals;
review and assess the experience of a range of economies in conducting monetary policy; and

■ explain the difficulties in designing optimal monetary policy and assess alternative solutions to these problems.

Students must submit at least 75% by weight of the components (including examinations) of the course's summative assessment.