EC424 Monetary Economics

Michaelmas Term 2019

Syllabus
Lecturer
Kevin Sheedy k.d.sheedy@lse.ac.uk Office hour: Thursdays 10.15–12.15 in 32L.1.09

Readings
The main textbook for the Michaelmas term is:

• C. E. Walsh, Monetary Theory and Policy, 4th ed., MIT Press

The following textbooks are also useful:

• J. Galı́, Monetary Policy, Inflation, and the Business Cycle, 2nd ed., Princeton University Press

• D. Romer, Advanced Macroeconomics, 5th ed., McGraw-Hill

In addition to the textbooks, there are links to relevant journal articles posted on the course’s Moodle
page: http://moodle.lse.ac.uk/course/view.php?id=1355
A reference text for some of the topics covered on the course is:

• M. Woodford, Interest and Prices, Princeton University Press.

Topics
1. Introduction to monetary theory (Walsh, ch. 2) (Galı́, ch. 2) (Romer, ch. 11)

2. Money and transactions (Walsh, ch. 3)

3. Search-theoretic models of money (Walsh, ch. 3)

4. The New Keynesian model (Walsh, ch. 8) (Galı́, ch. 3) (Romer, ch. 7) [Woodford, ch. 3]

5. Welfare costs of inflation and optimal monetary policy (Walsh, ch. 8) (Galı́, chs. 4–5) (Romer, ch.
11) [Woodford, chs. 6–7]

6. Monetary policy at the interest-rate lower bound (Walsh, ch. 11)

7. Time-dependent nominal rigidities & empirical evidence on price-setting behaviour (Walsh, ch. 7)
(Romer, ch. 6) [Woodford, ch. 3]

8. State-dependent nominal rigidities (Walsh, ch. 7) (Romer, ch. 6)