OAGE 0040 - Macroeconomics of monetary policy evaluation
The objective of the course is to present to students the theoretical framework that many central banks use to evaluate policy and the empirical techniques that central banks employ to identify the effects of policy. The course consists of two parts. In the first part, I give an introduction to the New Keynesian framework, which is the main theoretical framework that central banks use to evaluate monetary policy. In the second part, I provide an introduction to the empirical tools that central banks employ to identify the effects of their own monetary policy in the data. We will cover conventional and unconventional monetary policy. Knowledge of functions, derivatives, linear systems of equations, and linear regressions is assumed.
Learning Outcomes:
1. Students will be able to identify and discuss the main theoretical framework and the main empirical techniques that central banks use to evaluate policy.
2. Students will be able to understand the justification for the current stance of monetary policy.
3. They will also, to some extent, be able to evaluate alternative monetary policies.
Professional Skills:
Research & analysis, critical thinking, team work, oral & written communication
Sylvérie HERBERT
Cours magistral seul
English
- Learning activities: 24 hours a semester
- Reading and Preparation for Class: 100 hours a semester
- Research and Preparation for Group Work: 26 hours a semester
Grades are based on a group homework (40%) and a final examination (60%).
The homework should be completed in groups of 4 (3 min./5 max.). The homework will be handed out in class the week of lecture 4 and has to be handed back in class the week of lecture 9.
The readings will take about 3 hours per week.
Grades are based on two group homeworks (20% each) and a final examination (60%). The group homeworks should be completed in groups of 4 (3 min./5 max.). The group homeworks will be handed out in class in sessions 5 and 8. They have to be handed back within 2 weeks.
The group homeworks will be graded within 2 weeks. Each group will receive a written feedback on their homework in addition to the grade.
Students are always encouraged to ask questions in class and after class. This will help them assess their own understanding of the material.
1. Gali, Jordi (2015). Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework, Princeton University Press. Chapter 3. (Remark: The material covered in class will be a simplified version of the material in this
2. Engen, Eric M., Thomas Laubach, and David Reifschneider (2015). The Macroeconomic Ef2. Romer, Christina D., and David H. Romer (2004). A New Measure of Monetary Shocks: Derivation and Implications, American Economic Review, 94(4): 1055-1084.fects of t
3. Engen, Eric M., Thomas Laubach, and David Reifschneider (2015). The Macroeconomic Effects of the Federal Reserve's Unconventional Monetary Policies, Finance and Economics Discussion Series 2015-005. Washington: Board of Governors of the Federal Reserv
4. Altavilla, Carlo, Luca Brugnolini, Refet S. Gürkaynak, Roberto Motto, and Giuseppe Ragusa (2019). Measuring Euro Area Monetary Policy, ECB Working Paper No 2281.
5. Coibion, Olivier, and Yuriy Gorodnichenko (2012). What Can Survey Forecasts Tell Us about Information Rigidities? Journal of Political Economy, 120(1): 116-159.
7. Coibion, Olivier, and Yuriy Gorodnichenko (2015). Information Rigidity and the Expectations Formation Process: A Simple Framework and New Facts, American Economic Review, 105(8), 2644-2678.