International monetary policy


This seminar focuses on recent advances in monetary theory and monetary policy. The aim of the course is to help students understand how a central bank operates, so they can participate in public debates on monetary policy issues. We will focus mainly on the operation of the European Central Bank (ECB), but we will also occasionally discuss the conduct of monetary policy by other central banks such as the US Federal Reserve Bank, the Bank of England or Japan.

The first part of the seminar deals with the basic concept of monetary policy. In two introductory lectures an overview will be given about the ECB's monetary policy strategy and monetary policy implementation. The second part of the seminar consists of ten core sessions. Each core session will focus more intensively on individual aspects of monetary theory and policy. We will elaborate upon the nexus between money growth and inflation, the need for central bank transparency and independence and the idea of optimal monetary policy rules. In view of the current financial crisis, we will discuss the question of whether central banks should react to asset prices in their conduct of monetary policy and whether maintaining price stability is compatible with financial stability. We will discuss the impact of monetary policy on income and wealth distribution and finally, we will deal with the role of monetary policy before, during and after financial crises. We will also elaborate on the central bank's role as lender of last resort and unconventional monetary policy instruments.

Each core session will start with a brief lecture of 20-30 minutes, in which the current topic of the respective week is introduced. After discussing open questions, the second part of the session will be devoted to two specific research questions related to the current topic of the respective week. Students will prepare a presentation on the research topics and the main conclusions will be discussed in class.