International Monetary Economics, Autumn 2011
This is the course website for ECON 30150, taught by
Prof. Karl Whelan. The module focuses largely on how central banks conduct
monetary policy, how they interact with the banking system and other financial
markets and how they influence the economy.
Here
is some information about how the module will work.
Feedback: I
would be very grateful if students can fill out the online feedback form for
the module. You can fill out the form by clicking here or on the Student Surveys and Module
Feedback channel on the UCD Connect home tab. The form only takes a few minutes
but the feedback, whether positive or negative, is very valuable. The results
are completely anonymous so just say what you think. The
survey closes on 23rd December 2011.
There is no set textbook for this class. You will find
plenty of material to read in the notes and the other readings I provide. If
you really want a textbook, you could buy either The Economics of Money, Banking, and Financial Markets by Frederic Mishkin or Money,
Banking and Financial Markets by Steve Cecchetti. Neither of these books follow the structure
of this course but they do contain quite a lot of relevant material.
The final exam will take place on Monday December 19 at
noon in the RDS Main Hall. It will last for two hours. Here
is a handout with details on the format, some sample
questions and some tips on exam strategy.
Lecture Notes
1. Introduction
2. Banks and Financial Intermediation
6. Interest
Rate or Monetary Targeting?
7. The
ECB and Fed’s Operational Strategies
8. Introduction
to Banking Crises
10. Policy
Responses to the Global Banking Crisis
11. Incentive
Problems in Banking
13. The
Term Structure of Interest Rates
14. Default
Risk
15. Real
Interest Rates, the Zero Bound and Quantitative Easing
17. Credibility
and Commitment
19. The
Taylor Rule
20. Exchange
Rates and the Euro
21. The
Euro Crisis
Readings
and Useful Links
Links
to Data Sources and Economics Websites
Bank of
Ireland's Interim Report for 2011:H1.
Patrick Honohan's Report: The Irish Banking Crisis Regulatory and
Financial Stability Policy 2003-2008.
Information
on Payments Systems: TARGET2
and Fedwire.
Hans
Werner Sinn: The ECB’s
Stealth Bailout.
Karl
Whelan: Professor Sinn
Misses the Target.
ECB
Documentation: The
Implementation of Monetary Policy in the Euro Area.
Spreadsheet Example of Mutiple
Deposit Creation.
Paul De Grauwe and Magdalena Polan: Is
Inflation Always and Everywhere a Monetary Phenomenon?
FOMC Transcripts
and Documents.
Ulrich Bindseil: The Operational Target of
Monetary Policy and the Rise and Fall of Reserve Position Doctrine.
Piti Disyatat: Monetary Policy Implementation:
Misconceptions and their Consequences
Ben
Bernanke: Implementing
Monetary Policy
Daily
Data from the NY Fed: Fed Funds
Rates and Details
of Open Market Operations
Ben
Bernanke: Nonmonetary Effects of
the Financial Crisis in the Propagation of the Great
Depression (American Economic Review, June 1983. Not available outside UCD.
Go through UCD Connect and the Library Page.)
Karl
Whelan: Containing
Systemic Risk (Paper submitted to European Parliament.)
Ben
Bernanke: Implications
of the Financial Crisis for Economics
Piergiorgio Alessandri and Andrew
Haldane (Bank of England): Banking
on the State
Simon
Johnson: Economic
Recovery And The Coming Financial Crisis.
Douglas
Diamond and Raghuram Rajan: The
Credit Crisis: Conjectures about Causes and Remedies
Documentation for the Basle
2 Internal Ratings Based model.
Philipp
Hildebrand: Is Basel
II Enough? The Benefits of a Leverage Ratio
New York
Times: Risk
Mismangement
Patrick
Honohan: Bank
Failures: The Limits of Risk Modelling
Andrew
Crockett: Marrying the
Micro- and Macro-Prudential Dimensions of Financial Stability
Samuel
Hanson, Anil Kashyap and Jeremy Stein: A
Macroprudential Approach to Financial Regulation
Basle 3 Agreement
Bloomberg
Yield
Curve Page
Ben
Bernanke: The
Financial Accelerator and the Credit Channel
Joseph
Gagnon, Matthew Raskin, Julie Remache,
Brian Sack: Large-Scale Asset
Purchases by the Federal Reserve: Did They Work?
Stefania D'Amico and Thomas B. King: Flow
and Stock Effects of Large-Scale Treasury Purchases
Milton
Friedman: The Role of Monetary
Policy (Not available outside UCD. Go through UCD Connect and the Library
Page.)
Ben
Bernanke: The
Benefits of Price Stability
Olivier
Blanchard, Giovanni Dell’Ariccia, and Paolo Mauro: Rethinking
Macroeconomic Policy
Brad
DeLong: Central
Bank Credibility and Consistency: The Analytics
FOMC Statements,
Minutes, and Transcripts
ECB Press
Conferences: Transcripts and Video
John
Taylor: Discretion
Versus Policy Rules in Practice
Glenn Rudebusch: The
Fed's Monetary Policy Response to the Current Crisis
Carmen M. Reinhart, Jacob F. Kirkegaard, and
M. Belen Sbrancia: Financial
Repression Redux
European
Commission: Greece:
Debt Sustainability Analysis
ECB Legal
Paper: Withdrawal and
Expulsion from the EU and EMU: Some Reflections
Barry Eichengreen: The Breakup of
the Euro Area (May 2007)
Gavyn Davies: Thinking
the Unthinkable on a Euro Break-Up
Peter
Boone and Simon Johnson: Europe on the Brink