Focusing on the financial system and monetary policy, this course looks at key issues in the theory and practice of financial markets, banking, monetary policy and importantly their interaction and how this impacts the real world.
The course will relate this to recent economic events which have reverberated worldwide. It is particularly suitable for students wishing to enter careers in financial markets or further study in this area.
The Money and Banking course will look at some key issues in the theory and practice of financial markets, monetary policy and banking and how their interactions affect the real world.
The financial system has undergone many changes since the credit crunch and the Central Banks have had the unenviable task of stimulating the economy, encouraging lending, managing inflation and exchange rates. This course will focus on the financial system and monetary policy in countries around the world and present an opportunity to discuss the financial institutions and monetary policies of different nations, evaluating their relative success in recovering from the financial crisis.
Syllabus and Course overview
The focus of the course will be the theory and practice of monetary policy institutions. Within this, the interaction between the financial system (in terms of its institutions and instruments) and the macroeconomy will be examined and there will be a strong practical and policy related element to the course. The course will present an opportunity to discuss the financial institutions and monetary policies of different nations and evaluate their relative success in recovering from the financial crisis. A broad range of topics will be analysed, including how bank runs develop and a discussion of the financial crises in the US and the Eurozone and their different experiences. The course will also introduce the students to some of the state of the art methods applied in modern macroeconomics such as the new Keynesian models. The following list includes the topics that will be covered:
- Money supply and the role of the banking sector
- Interest rates and rates of return
- The stock market and financial market efficiency
- Monetary policy and monetary rules
- New Keynesian macroeconomic models
- Financial crises and regulation
- The 2008’s financial crisis and monetary policy responses
This course aims to draw on recent financial events from across the world and provide students with a detailed understanding of the economic theory behind the way in which monetary policy can be designed and implemented. By focussing on the interactions between monetary policy, banking and financial markets, this course will give students the tools they need to understand and evaluate these links and apply their findings to real world applications in a variety of countries. Students taking this course will gain a greater awareness of the key elements of the financial system and the roles played by different financial assets. The course aims to give students greater awareness of the monetary transmission mechanism and how we can use modern empirical methods to understand it. There are important economic lessons to be learnt from the financial crisis and this course will aim to relate relevant economic theory and applications to recent events which have reverberated worldwide. With the aim of developing students’ knowledge and understanding of the complex interactions between monetary policy, financial markets, banks and the economic situation, this course will be ideal for anyone looking to further their knowledge in monetary and financial economics, perhaps with an aim of pursuing a career in this field or undertaking postgraduate study. It will therefore aim to provide students with a rare opportunity to combine academic theory with their interest in a future career in such a direct manner.
By the end of this module, students should be able to:
- Understand the main elements of the financial system.
- Apply both micro and macro theory to real-world situations in the areas of money and banking.
- Outline and give a detailed justification of the main goals of monetary policy.
- Assess the relative merits of different countries’ monetary policy institutions.
- Critically discuss and debate a range of current monetary issues.
- Express their views about pertinent monetary and fiscal issues and evaluate the effectiveness of such policies.
- Present clearly and methodically in their own words, also using equations and diagrams.
For this course, there will be 4 hours of teaching per day, comprised of lectures and small group teaching. The structure will be:
- 3 hours of lectures.
- A 1 hour seminar in small groups.
Students will be given time each day for independent study. Towards the end of the third week, students will also be provided with time for revision.
The module will be assessed via a 2-hour examination. It should be noted that the exam is not compulsory. Everyone who completes the course – whether or not they sit the exam - will receive a certificate of attendance. However, by taking the exam you will also receive a grade/mark for the course which can be helpful to you.
Course Reading list
- Carlin, W and D Soskice (2015) Macroeconomics: Institutions, Instability, And The Financial System, OUP
- K Matthews and J Thompson (2014) The Economics of Banking, Wiley
- McLeay et at. (2014) Money Creation in the Modern Economy. Quarterly Bulletin Q1, BoE.
- Mishkin, F (2018) The Economics of Money, Banking and Financial Markets, Global Edition. Pearson.
- Blanchard, O. Amighini , A. Giavazzi, F. (2017) Macroeconomics: A European Perspective. Pearson.
- Kay, J. (2015). Other People’s Money: Masters of the Universe or Servants of the People? Profiles Books, London
- Neilson, D. H. (2012) Banks as Creators of Money. The Money View, INET. Available here
This course is open to students who are studying or have previously studied Economics at University level. You should attach your most recent transcript or provide a screenshot of your modules from your student portal as evidence when you apply. Students should also meet our standard entry requirements and must be aged 18 or over by the time the Summer School commences and have a good understanding of the English language.
Materials will be updated here after each lecture.
Please note changes to the syllabus and teaching team may be made over the coming months before exact set of topics are finalised.