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Introduction

Principal Aims

The main objective of this module is to provide an understanding of the key aspects of monetary dynamic stochastic general equilibrium (DSGE) models, with a focus on recent contributions to the literature and their applications.

Principal Learning Outcomes

Cognitive Skills:...have some critical awareness of the limitations and strengths of the models studied, the empirical procedures used alongside these in monetary economics, and the discussion between these two approaches in the literature.

Subject Knowledge and Understanding:...show an understanding of monetary policy trade-offs, the design of monetary policy, and the optimal policy implied by New Keynesian models.

Subject Knowledge and Understanding:...show an understanding of the role of credit frictions in the business cycle and the transmission of monetary policy.

Subject Knowledge and Understanding:...demonstrate a thorough understanding of the role of nominal rigidities in generating a role for monetary policy and matching ‘stylised facts’ of the business cycle.

Subject Knowledge and Understanding:...demonstrate a thorough understanding of the estimation of the effects of monetary policy using suitably identified Vector Autoregressions.

Cognitive Skills:...solve simple dynamic optimisation problems.

Subject Specific and Professional Skills:...demonstrate an awareness of the Real º£½ÇÉçÇø Cycle research agenda and simple versions of that model.

Subject Knowledge and Understanding:...demonstrate a thorough understanding of the Basic New Keynesian Model.

Subject Specific and Professional Skills:...use specialist software for the solution and evaluation of New Keynesian and RBC models.

Syllabus

Context

Optional Module

L1P6 - Year 1, L1P7 - Year 1, L1I1 - Year 1, LN1J - Year 1, G30B - Year 4

Pre or Co-requisites

Pre-requisites: Undergraduate macroeconomics and econometrics at intermediate level. Co-requisites: the course will build on material in core macro and econometrics lectures.

Assessment

Assessment Method

Coursework (30%) + Centrally-timetabled examination (On-campus) (70%)

Coursework Details

Centrally-timetabled examination (On-campus) (70%) , Problem Set 1 (15%) , Problem Set 2 (15%)

Exam Timing

May

Reading Lists