Macroeconomics II - Monetary Macroeconomics

The course analyzes how future expected money supply affects the current price level, why money can be written in the utility function and what is required to determine a unique equilibrium with rational expectations. Turning to the foundations of New Keynesian Macroeconomics, we analyze why monopolistic competition leads to an active role for monetary policy, derive the forward looking Phillips curve and study optimal monetary policy.

Literature: Walsh, Monetary Theory and Policy, MIT-Press, 2003. Woodford, Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press, 2003.