Monetary Economics

Module code: ECN6660

Monetary Economics aims:

  • To provide a formal analysis of Monetary Economics and an understanding of how monetary policy works
  • To provide an understanding of the role of monetary policy in the macro economy
  • To expose students to the latest theoretical developments in monetary theory and policy
  • To equip students with the analytical framework for solving dynamic stochastic general equilibrium (DSGE) models.
  • To understand some of the limitations of monetary policy

Learning objectives

By the end of the module you should demonstrate

  • An understanding of the role of money in both the short run and the long run
  • The ability to solve DSGE models
  • The aims of the world’s major central banks
  • An understanding of the monetary transmission mechanism


  • Empirical evidence on money, prices and output
  • Representative agent models and money
  • Solving real business cycle models
  • The role of money in the short run: business cycle models
  • New Keynesian monetary economics
  • Monetary policy and time inconsistency
  • Open economy monetary models

Teaching methods

Two-hour lectures and a one-hour workshop


A two-hour exam (75%) and there is also a written assignment (25%).

Basic reading

We advise you not to buy books before the module begins, as the reading list may change. If you wish to read in advance, look for these texts in the University library

The following textbooks can be used as background reading:

Walsh, Carl E. (2010), ‘Monetary Theory and Policy, Third Edition, MIT Press

Prerequisites Knowledge of advanced economics at undergraduate level. It will be assumed that students have a working knowledge of:
• Multivariate calculus and optimisation;
• Linear algebra – including determinants, inversion, eigenvalues and eigenvectors.
• Time series
• Matrix algebra

Module leader Dr Juan Paez-Farrell

Please note that the leader may change before the module begins

Semester Spring

Credits 15