Monetary Economics: Macro Aspects

Spring, 2009

Henrik Jensen
Department of Economics
University of Copenhagen

Course details and plans

Plans and formalities

Official course description (pdf, 80 kb)
Preliminary reading plan, January 26 (pdf, 310 kb)
Working schedule, January 28 (pdf, 350 kb) (Updated April 19)
Final curriculum, May 22 (pdf 3320 Kb)


Course details

The aim of the course is to offer an understanding of several aspects of money and the macro economy, thereby providing insights into how and why monetary phenomena and policy affect important macroeconomic aggregates such as output, consumption, inflation and unemployment. Moreover, focus will be on the characteristics of “good” monetary policymaking in the sense of assessing the advantages and disadvantages of various monetary policy strategies. To secure a firm foundation for the aspects covered, emphasis will be on rigorously formulated theoretical models. Economic intuition, however, is just as important as mathematical formalism. Although the curriculum will be mainly theoretical, the empirical relevance of the material will not be underplayed. Particular aspects to be covered include: money’s role in flexible-price general equilibrium models; money’s role with incomplete nominal adjustment; credibility problems in monetary policy; the importance of institutional frameworks for monetary policy; interest rate rules, international monetary policy coordination..

The curriculum will consist of a large part of Carl. E. Walsh (2003): Monetary Theory and Policy. Second Edition, The MIT Press, and a number of articles. (Link to Walsh's List of Typos in the book.)

Recommended qualifications: As some of the material requires a thorough understanding of macroeconomic general equilibrium models, it is a prerequisite to master economic theory at a level corresponding to David Romer (2006): Advanced Macroeconomics, McGraw-Hill. In particular, the chapter on the Ramsey model should be known (so if you have not taken the old Macro 3 in Spring 2007 or the newer Advanced Macro course, you must familiarize yourself with this chapter). Alternatively, you must have taken Advanced Macroeconomics. One should therefore be familiar with basic intertemporal optimization, and analyses of static and dynamic systems with rational expectations.

Most importantly, one should not be afraid of mathematical rigor. At the end of the day it merely serves to create conclusions and policy implications that are internally consistent. Not a bad starting point for organizing your thoughts. And remember that it's the economics which is the important stuff; the math is just a helpful tool!

Assessment: Written 4-hour exam; closed book. Date: TBA.

The teaching language is English.

Old exam sets

Go here (opens new window) for the collection of previous exam sets and suggested solutions. Note that the exam in 2006 was "open book" and therefore slightly harder than the earlier exams. Hence, the exams in 2003, 2004, 2005, 2007 and 2008 are the most representative for the exam of this course. In the link there is some confusion about the 2008 sets. So I post them here:
Regular exam 2008 (pdf, 70 kb); suggested answers (pdf, 110 kb)
Re-exam 2008 (pdf 58 kb); suggested answers (pdf, 82 kb)
I also see that the 2003 exam is a weird version of the set. So here it is (pdf, 70 Kb)