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The focus of this course is on the conduct of optimal monetary policy in open and closed economies. Various issues in monetary policy under uncertainty are explored. A great deal of attention is devoted to issues pertaining to rules vs. discretion in policy-making. We address topics as diverse as interest rate pegs, nominal income targeting vs. price level/ inflation targeting, collection of seigniorage, central bank independence, and others.
The focus of this course is on the conduct of optimal policy by a central bank. We trace the development of thinking on policy issues in stochastic macroeconomic models from its roots in the 1960s to the modern day approach. Topics covered range from rules vs discretion in policymaking, the differences between policymaking in open vs closed economies, the choice of monetary policy strategies, the policy implications of transmission lags, revenue smoothing, etc. Policymaking during the Global Financial Crisis is considered as well as is the interaction of monetary policy with macroprudential policy to ensure macroeconomic stability.
The objectives of the course are:1. showing how thought on monetary policy has evolved over the past 40 years.2. demonstrating the advantages and disadvantage of various monetary policy strategies.3. highlighting the difference between the conduct of monetary policy in open as opposed to closed economies.4. helping the student appreciate the difficulties central banks face in designing monetary policy under uncertainty.5. developing research and writing skills.
Subject to approval of the Head of Department
Students must attend one activity from each section.
Alfred Guender
The student’s understanding of the course material will be examined in a compulsory final exam. The student has the option of writing a research paper. The research exercise counts 33 percent towards the final course grade. If taken up, the paper is due on the last day of lectures (May30th). The ‘45% rule’ does not apply to this course. That is, students do not need to reach 45% weighted average across invigilated assessments. Please refer to Learn for further information.Assessment in Te Reo MāoriIn recognising that Te Reo Māori is an official language of New Zealand, the University provides for students who may wish to use Te Reo Māori in their assessment. If you intend to submit your work in Te Reo Māori you are required to do the following: Read the Assessment in Te Reo Māori Policy and ensure that you meet the conditions set out in the policy. This includes, but is not limited to, informing the Course Coordinator 1) no later than 10 working days after the commencement of the course that you wish to use Te Reo Māori and 2) at least 15 working days before each assessment due date that you wish to use Te Reo Māori.
Froyen, Richard T. , Guender, Alfred V; Optimal monetary policy under uncertainty ; Second edition; Edward Elgar Publishing, 2019.
Gali, Jordi; Monetary policy, inflation, and the business cycle : an introduction to the new Keynesian framework ; Princeton University Press, 2008.
Walsh, Carl E; Monetary theory and policy ; 3rd ed; MIT Press, 2010.
Woodford, M; Interest and Prices ; Princeton, 2003.
Domestic fee $1,066.00
International Postgraduate fees
* All fees are inclusive of NZ GST or any equivalent overseas tax, and do not include any programme level discount or additional course-related expenses.
For further information see Department of Economics and Finance .