EC6012 Course Outline

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[Kinsella_EC6012_CourseOutline_2.pdf]

Introduction

Monetary economics concerns the relationship between real and nominal variables. International monetary economics considers these relationships in the context of an open economy. The aim of this course is to develop simple models to evaluate the effects of policies on inflation, employment, real interest rates, and production.

Learning Outcomes

At the end of this course, students should be able to

• describe the development of major international institutions like the World Bank, the IMF, and the EU;
• give a brief account of some simple stock-flow consistent models used in evaluating monetary policy;
• describe the evolution of the neoclassical and structuralist macroeconomic modelling paradigms since Keynes' death.

Lecturer Contact Details

My office is AM068a, office hours are 12--1pm on Tuesdays or by appointment. Contact me by email at stephen.kinsella@ul.ie.

Textbook



Students are urged to buy Goldey and Lavoie's Monetary Economics An Integrated Approach to Credit, Money, Income, Production and Wealth, Palgrave-Macmillan, 2006.

I also recommend you buy Taylor, Restructuring Macroeconomics.

Basic reading for the first two lectures will be taken from Leddin and Walsh's Macroeconomy of the Eurozone, or in the library at 339.09417/LED

Assessment

Assessment will consist of an end of term exam worth 50\% and a group presentation worth 30\% and 2 or 3 exercises worth 20\%. A sample exam will be distributed in week 6 of term. The exam is an essential part of the assessment, and each part of the course assessment must be passed.

The presentation will be on one of the models taught in the class: the group will be expected to present the fundamentals of the model to the class. Marks will be given for accuracy of material, structure of presentation, relevance of material, use of graphic displays and general preparedness. Written feedback will be given.

Lecture Outline & Layout

Lectures are 2 hours long, from 10am to 12pm in S114 in the Schuman building and participatory. This is a Master's class, so students are expected to have read the lecture material before the lecture. Slides used during the lectures will be provided during the lectures and online at stephenkinsella.net. There will also be a podcast of the lecture available afterward on the site.

The layout for the course is as follows

Review of intermediate open economy macroeconomics Primitive concepts review. AS-AD, Balance of Payments, Circular Flow models in open  economies. `Money' measurement and definition. Macroeconomic objectives, The money concept its origin, definition and current role; different types of money â commodity money, fiat money, etc; Measuring the money supply M0, M1, M2, etc

; Money supply counterparts, the causes of money supply changes ;The demand for money and its determinants ;The repo rate and its impact on the economy; The role of all the other interest rates in the economy; The monetary transmission mechanism; How the Reserve Bank conducts monetary policy; The reason for having inflation targets. [Two lectures, Reading: Chapters 2 and 3, Leddin & Walsh, 2003

A Simple Stock-Flow Social Accounting model  Introduction to Social Accounting Matrices, stock-flow accounting, simple transmission mechanisms for growth, and  [Three lectures], Reading: Chapter, Godley, 2006, Chapter 1, Taylor, 2004.

Balance Sheets, Transactions Matrices, and the Monetary Circuit Establishing the technical apparatus of the structuralist approach. [Three Lectures] Reading: Chapter 2 Godley, 2006

A very simple Model with Government Money Government and private money and a service economy [Two lectures] Reading:  Chapter 3 Godley, 2006

Government Money with Portfolio Choice The PC Model simulated and derived for the class.[Two lectures] Reading:  Chapter 4 Godley:2006

Presentations

Presentations will be made on the following papers in the following areas. All papers are available at http://www.stephenkinsella.net/?p=148. We'll set a timetable for presentations in the first lecture.

Presentation 1 Robert Mundell,  The Pure Theory of International Trade.

Presentation 2 Lloyd A. Metzler Tariffs, the Terms of Trade, and the Distribution of National Income

Presentation 3 Harry G. Johnson  The Transfer Problem and Exchange Stability

Presentation 4 Gottfried Haberler \emph{Some Problems in the Pure Theory of International Trade

Presentation 5 H. W. Singer, The Distribution of Gains between Investing and Borrowing Countries