ECON 452
Foundations of Money, Credit, Banking, and FinTech Spring 2024
Division II
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This course aims to address fundamental questions at the core of monetary and financial macroeconomics: what is money, and why is it an essential means for transactions? What is monetary policy, when does it become effective, and what should optimal monetary policy arrangements look like? How do financial markets and institutions interact with monetary policy? Throughout the course we will develop and solve rigorous general equilibrium macro models that feature money, financial markets, and institutions to address these questions. We will also connect the implications of the models with real world evidence. In the first part of the course, we will study the monetary policy transmission mechanisms and familiarize ourselves with the implications of rational expectations for monetary policy. We will build familiarity with discrete-time dynamic optimization techniques, develop and solve workhorse monetary DSGE (dynamic-stochastic general equilibrium) models, and explore the interactions between nominal variables (such as inflation and nominal interest rates) and real economic variables (such as output and unemployment) – over the business cycle and in the long-run. The second part of the course will extend the monetary macro models developed in the first part by incorporating foundations for credit, banking, and fintech to understand why the needs for these financial arrangements arise and how they interact with money and monetary policy.
The Class: Format: lecture; discussion
Limit: 19
Expected: 19
Class#: 3785
Grading: no pass/fail option, no fifth course option
Requirements/Evaluation: Homework assignments, exams, and a final group project.
Prerequisites: Econ 252 and Math 130 or equivalent.
Enrollment Preferences: Junior or senior economics majors who are interested in monetary economics and macro-finance.
Distributions: Division II

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