COURSE DESCRIPTION

The course unit aims to provide an in-depth understanding of the interrelationships between monetary policy, capital markets and the real economy. The course is divided into two parts. In the first part the students are introduced to fundamental macroeconomic concepts and the role of monetary policy. In the second part the course touches upon special contemporary issues related to the effects of the financial system and policy on real investment decisions and the macro economy.     

EDUCATIONAL OBJECTIVES

• Introduce students to the fundamental macroeconomic concepts.
• Familiarize students with the tools and the effects of conventional and unconventional monetary policy.
• Familiarize students with the interrelationship between the financial system and the real economy.

LEARNING OUTCOMES

On completing the course participants will:

• Be able to comprehend the conduct of monetary policy and its implications.
• Understand how real investment decisions are affected by financial conditions.

BRIEF DESCRIPTION OF THEMATIC AREAS

• Thematic Area 1: Conventional and Unconventional Monetary Policy

Presentation of Monetary Mechanics, alternative models for Money Demand, Definition of Money Supply and different monetary aggregates, Conventional Monetary Policy Tools, Unconventional Monetary Policy Tools.  

• Thematic Area 2: Monetary Policy Transmission Mechanisms, Interest Rate Channel, Credit Channel, Balance Sheet Channel, Bank Lending Channel

How Monetary Policy Shocks are transmitted to the real economy, presentation and analysis of the various channels.         

• Thematic Area 3: The Financial System and The Real Economy, Capital Market Imperfections and Real Investment Decisions

The behavior of real investment decisions in the presence of imperfect capital markets and financial constraints.

• Thematic Area 4: Monetary Policy in an Open Economy

Exchange Rate Determination, Monetary Model, Target Zone Model, Currency Attacks.