This the module page for EC6012, International Monetary Economics 2012.

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Introduction. Monetary economics occupies a strange space in economics. At one level the subject is highly theoretical, taking insights from general equilibrium theory and modern finance theory, as well as more unorthodox approaches like circuitist and post-Keynesian fields. The subject is empirical, dealing as it does with a large array of data usually in time series like exchange rates, currency movements, sovereign bonds, and so forth. And finally the subject is highly practical: at the business end of monetary economics policy makers have to make decisions that might affect millions of people's lives for the better or for the worse if the policy maker messes up.

This module looks in detail at the development of monetary economics as a subject, and gives students the tools to understand current policy debates at both a theoretical and practical level. The empirical side of the subject you will learn for yourselves (supported by tutorials) by writing a data-intensive research paper worth 100% of your grade in the subject.

Administration. My office hours are 9-11 Wednesdays, office KB 3-42, phone number 061 233611. Email is stephen.kinsella@ul.ie Please do read my email policy before sending me emails. Classes meet every Friday from 11-1 in S115. Slides and handouts for the lectures will be available before lectures.

Assessment. You will produce a 15-20 page research paper in an area of monetary economics. A one page proposal based on this template using these guidelines is due before lectures in week 6 to be discussed in office hours in weeks 7 and 8, and the full paper is due at the start of class in week 12. You must also submit the paper via turnitin. No lateness will be tolerated. A guide to the assessment is available here. Here is a nice slideshow on putting together a research paper from Berkley. A guide for Turnitin is here, and the grading template we will use is here.

30/3/2012: Detailed feedback is available on Turnitin now, and the overall marks are here.

Detailed Module Outline. Readings are all hyperlinked where possible, where not they are available as part of a course pack (.pdf, please be careful this file is quite large, so be on campus). You aren't expected to read every paper, but they will provide a good guide to the literature and give you a sense of the types of papers out there, which will help your research papers. Many of the readings are on Jstor and require you to be on campus or logged into the library. All books mentioned are available as ebooks through the library as well.

Jan 27. Trip to Dublin for Irish Economy Crisis Conference. This will give students a good overview of the Irish economic situation from some of the best economists around, and give food for thought on the research paper, as well as your MSC thesis topics.

Feb 3. Theories of money and banking, macroeconomics 101, the economics of the current account, and basic data analysis. (Lecture Slides).

• Morris A. Copeland, Concerning the Origin of a Money Economy, The American Journal of Economics and Sociology , Vol. 33, No. 1 (Jan., 1974), pp. 1-17
• Armen A. Alchian Why Money? Journal of Money, Credit and Banking, Vol. 9, No. 1, Part 2 (Feb., 1977), pp. 133-140
• R. A. Radford The Economic Organisation of a POW Camp Economica, New Series, Vol. 12, No. 48 (Nov., 1945), pp. 189-201
• E. Leamer, Macroeconomic Patterns and Stories Springer, 2009, Chapters 1, 2, 3. Available as an ebook in the library.

Feb 10. Central banking, money and inflation, the construction of the Eurozone monetary system, monetary policy implementation. (Lecture Slides)

• European Central Bank: Aggregated balance sheet of euro area monetary financial institutions, excluding the Eurosystem
• European Central Bank: The Implementation of Monetary Policy in the Euro Area, 2011.
• Ben Bernanke, Implementing Monetary Policy, speech at Redefining Investment Strategy Education Symposium, Dayton, Ohio, 2005.
• Maurice Obstfeld, The International Monetary System: Living with Asymmetry, U. Berkely Mimeo, 2011.
• Paul De Grauwe Flaws in the design of the Eurosystem, International Finance, 9:1, pp.137-144, 2006
• E. Leamer, Macroeconomic Patterns and Stories, Springer 2009, Chapter 4. Available as an ebook in the library.

Feb 17. Banking, Financial Intermediation, and Crisis. (Lecture Slides)

• Andrew Haldane, Risk Off, Speech on August 18, 2011.
• Paul Fisher, Current Issues in Monetary Policy Speech at the Global Borrowers and Investors Forum, London 21 June 2011.
• Douglas W. Diamond Financial Intermediation and Delegated Monitoring The Review of Economic Studies , Vol. 51, No. 3 (Jul., 1984), pp. 393-414
• Hyman Minsky, The Financial Instability Hypothesis, Levy Institute Working Paper series 74, 1992.
• Patrick Honohan, Irish Banking Policy During and After the Crisis, 2009
• George Soros The New Paradigm for Financial Markets, The Credit Crisis of 2008 and what it means. New York: Public Affairs, 2008. (amazon.com link)

Feb 24. Balance of payments, flow of funds analysis. (Lecture Slides)

• Stefania D'Amico and Thomas B. King: Flow and Stock Effects of Large-Scale Treasury Purchases
• Morris A. Copeland Social Accounting for Moneyflows The Accounting Review Vol. 24, No. 3 (Jul., 1949), pp. 254-264
• Jacob Cohen Copeland's Moneyflows after Twenty-Five Years: A Survey Journal of Economic Literature Vol. 10, No. 1 (Mar., 1972), pp. 1-25
• Richard Barwell and Oliver Burrows Growing fragilities? Balance sheets in 
• The Great Moderation Bank of England Financial Stability Paper No. 10 – April 2011

Mar 2. Regulation. Or lack thereof.(Lecture Slides)

• Jeremy C. Stein, Monetary Policy as Financial-Stability Regulation, Quarterly Journal of Economics, 2012.
• KPV O'Sullivan and S. Kinsella, Financial and Regulatory Failure, the case of Ireland, Journal of Banking Regulation, 2012.

Mar 9. Digging into theory, 1: The Basics. (Lecture Slides)

• John. R. Hicks 'Mr. Keynes and the "Classics"; A Suggested Interpretation, Econometrica Vol. 5, No. 2 (Apr., 1937), pp. 147-159
• Ben S. Bernanke and Alan S. Blinder, Credit, Money, and Aggregate Demand, The American Economic Review, Vol. 78, No. 2, Papers and Proceedings of the OneHundredth Annual Meeting of the American Economic Association (May, 1988), pp. 435-439
• Maurice Obstfeld, International Macroeconomics Beyond the Mundell Fleming Model, The Mundell-Fleming Lecture, presented at the First Annual Research Conference of the International Monetary Fund, November 9-10, 2000.
• Philip Lane "Some Lessons for Fiscal Policy from the Financial Crisis," Nordic Economic Policy Review1(1), 13-34, 2010.

Mar 16. Digging into theory, 2: The not-so-Basics. (Lecture Slides)

• Oliver Williamson Visible and Invisible Governance  The American Economic Review , Vol. 84, No. 2, Papers and Proceedings of the Hundred and Sixth Annual Meeting of the American Economic Association (May, 1994), pp. 323-326
• Lisa A. Keister, Financial Markets, Money, and Banking Annual Review of Sociology Vol. 28, (2002), pp. 39-61
• Robert W. Clower The Anatomy of Monetary Theory The American Economic Review , Vol. 67, No. 1, Papers and Proceedings of the Eighty-ninth Annual Meeting of the American Economic Assocation (Feb., 1977), pp. 206-212
• Maurice Obstfeld and Kenneth Rogoff,"The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Macroeconomics Annual Volume 15, 2000

Mar 23. Money, finance, interest, and inflation targeting (Lecture Slides)

• Christopher Sims A Simple Model for Study of the Determination of the Price Level and the Interaction of Monetary and Fiscal Policy, Economic Theory, 4(3), 381−399, 1994
• Tobin, J., "Money and Finance in the Macroeconomic Process", Journal of Money, Credit and Banking, VIV (May 1982), 171-204.
• William Speller, Gregory Thwaites and Michelle Wright The future of international capital flows. Financial Stability Paper No. 12 – December 2011
• Hyun Shin, Global Banking Glut and Loan Risk Premium, Mundell Fleming Lecture, 2011.

Mar 30. Business cycles in monetary theory (Lecture Slides)

• Robert Hall Why Does the Economy Fall to Pieces after a Financial Crisis? Journal of Economic Perspectives—Volume 24, Number 4—Fall 2010—Pages 3–20
• Edward Leamer, Housing IS the business cycle, Paper presented at Jackson Hole conference, 2007.
• Wynne Godley and Marc Lavoie, Monetary Economics, Palgrave, 2007. Ebook in Library, Chapters 1, 2, 13.

April 6. Sovereign Defaults. (Lecture Slides)

• ECB, Greek Debt Sustainability Analysis
• Irish Fiscal Advisory Council, Annual Report, 2011
• Tamim Bayoumi, Morris Goldstein and Geoffrey Woglom Do Credit Markets Discipline Sovereign Borrowers? Evidence from U.S. States Journal of Money, Credit and Banking Vol. 27, No. 4, Part 1 (Nov., 1995), pp. 1046-1059
• Adrian Blundell-Wignall and Patrick Slovik, A Market Perspective on the European Sovereign Debt and Banking Crisis OECD Journal: Financial Market Trends Volume 2010 – Issue 2.

April 13 No Lecture.

April 20. Recap and Feedback.

Some important databases and useful sites.

EU Statistical Database Warehouse http://sdw.ecb.europa.eu/

Irish Central Bank

CSO Database Direct.

Bloomberg table of bond maturities. http://www.calculatedriskblog.com/p/european-bond-yields.html

Calculated Risk Graph Galleries http://www.crgraphs.com/

EU AMECO: http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm

Flow of Funds accounts for the US: http://www.federalreserve.gov/releases/Z1/

Detailed Flow of Funds Accounts for the US: http://www.federalreserve.gov/releases/Z1/current/accessible/f6.htm

Glossary of International Economics Terms: http://www-personal.umich.edu/~alandear/glossary/