Economics

The course aims at introducing students to the recent debate on the theory of monetary policy. To this end, students learn the concepts, methodologies and analytical tools which are necessary to understand the advanced theoretical models on the subject matter. Special attention is devoted to the analysis of dynamical system, to the methods of expectation formation and to the foundations of game theory. Based on these conceptual and analytical elements, the course pursues the general objective of deepening the main theoretical issues which contributed to design the monetary policy regimes actually realised in the last decades. In this way, the course allows students to understand the current debate on the accomplished realizations and on the limits encountered by the central banks of the main industrialized countries. This requires to devote a specific part of the course to the theoretical models recently employed to identify the optimal behaviour of central banks. In this way, the course offers students the possibility to learn both advanced theoretical notions, which are useful to understand the real economic world and which are necessary for those who wish to continue the study of economics, and the actual behaviour of monetary authorities, of particular relevance for those who are interested in monetary and financial issues and wish to enter the labor market after the Laurea. The acquisition of all the tools that are necessary to achieve the teaching targets is guaranteed by specific sections of the program. Students passing the exam know at an upper intermediate level the most recent theory of monetary policy and they understand the most recent theoretical models underlying the behavior of the central banks of the main industrialized countries. They possess the advanced mathematical and economic tools required by this task and have a particularly good knowledge of game theory and economic dynamics. They understand the problems introduced into monetary economic modelling by the presence of multiplicative uncertainty. Specific knowledge refers to both New Classical and New Keynesian theorizing in monetary policy, to the design of constraints on central banking and to the problem of transparency in monetary policy. The simulation of dynamical economic systems is known at an introductory level. Students passing the exam are able to understand the current debate on the theory of monetary policy and to read without any problem National and International reports on central banking by private and public institutions (starting from the monthly bulletins and the annual reports by central banks, the Bank for International Settlements, the International Monetary Fund and the other main international institutions). They read without difficulties scientific papers on the studied topics at an upper intermediate level. They are also able to construct upper intermediate models employing game theory and dynamic optimisation methods. They can simulate the response of economic variable to shocks in basic dynamic stochastic general equilibrium models by use of the Dynare freeware software. Finally, they can understand the motivations underlying the actual choices of central banks and to derive their effects on the (current and expected) main economic variables.