MONETARY AND FINANCIAL ECONOMICS

This course is a core educational activity of the Bachelor’s Degree programme in Economics and Business. The aim of the course is to provide an introduction to the main theories and analytical tools of modern monetary economics. The course examines the role of money, financial institutions, and central banks in the economy, and analyses how monetary policy is designed and implemented. Particular attention is devoted to the mechanisms through which policy decisions affect macroeconomic outcomes, as well as to the interaction between domestic economies and the international monetary environment.

1. Knowledge and understanding:
1.1. Understand the role of money, financial institutions, and central banks in modern economies
1.2. Understand the determinants of money demand, interest rates, and monetary equilibrium
1.3. Understand the design, implementation, and effects of monetary policy in domestic and international contexts
2. Ability to apply knowledge:
2.1. Analyse the effects of monetary policy actions on financial markets and macroeconomic variables
2.2. Apply standard monetary models to assess how central banks can achieve objectives such as price stability and economic stabilization
2.3. Compare alternative monetary policy strategies and evaluate their implications for economic outcomes
3. Making judgements:
3.1. Assess monetary and financial conditions and formulate informed views on their likely evolution
3.2. Evaluate the effectiveness of different monetary policy approaches in achieving macroeconomic objectives
3.3. Interpret and critically assess current policy debates in light of the theoretical frameworks studied in the course

Principles of microeconomics and macroeconomics; introductory statistics (probability, hypothesis testing), basic mathematics for economics (algebra, calculus, constrained optimization)

The program for the course is as follows:
* The nature and functions of money
* The demand for money and interest rate determination
* The banking system and money supply
* Central bank operations and policy tools
* The transmission mechanism of monetary policy
* Monetary policy frameworks, credibility, and communication
* Exchange rates and international monetary linkages

Baglioni, A. (2024). Monetary Policy Implementation: Exploring the 'New Normal' in Central Banking. Springer. https://link.springer.com/book/10.1007/978-3-031-53885-8
Additional material on specific topics will be made available on Moodle.

Assessment consists of a written exam of 90 minutes. The exam includes multiple-choice and open questions. An optional group assignment may be completed to obtain a bonus. This bonus is valid only for the first exam session (first round of exams) and will be added to the final mark obtained in that session.

written

The instructor is responsible for ensuring the authenticity and originality of all examinations and coursework. In cases of suspected academic misconduct, an additional on-site assessment may be required during the exams, which may differ from the standard format.

Grades are expressed in a scale out of 30. The pass grade is 18/30. The use of books, notes, or any electronic devices (with the only exception of a non-programmable calculator) is not allowed during the examination. The exam assesses the degree to which students have achieved the expected learning outcomes described in the preceding sections of this syllabus. It evaluates knowledge and understanding of the course content, and the ability to apply these concepts to study price formation mechanisms in financial markets and analyze the performance of portfolios of financial instruments.

The course mainly adopts a conventional teaching approach combined with group case studies. The lectures provide tools to analyze and apply acquired knowledge, while the case studies focus on using databases, applying concepts, and developing critical judgment.

See course website on Moodle.