Introduction

The course develops a number of theoretical frameworks for the analysis of domestic economic perspective related to money, market for money, monetary transmission mechanisms, which provides a base for the understanding of Classical and Keynesian approaches for monetary theory and their empirical evidence.
The course provides an introduction to monetary theory, to the effects of monetary variables on the macroeconomic system, the role of the Central Bank and the conduct of monetary policy. Subjects covered include: The nature and function of money. Classical monetary theory, neutrality and inflation. Interest-rate feedback rules. Theories of the demand for money. The banking system, financial intermediation and the determinants of the money supply. The transmission mechanism of monetary policy, including theories of nominal rigidities and the Phillips curve. The term structure of interest rates. The theory and practice of monetary policy and the design of optimal policies. Monetary policy strategies, including inflation targeting. Policymaking in an uncertain environment. The interaction between monetary and fiscal policy and the arguments for Central Bank independence. Financial crises and the role of the central bank as a lender of last resort.
The course contents of the subject serve following objectives:

Learning Outcomes

The course contents of the subject serve following objectives:

• Understand the role of money, money demand and supply in the development of the economy.
• Understand the role of central bank in any economy.
• Describe the role of money with interest rate and inflation.
• Describe the international framework for monetary policy.

Readings

1. M.L. Jhingan, Monetary Economics (Sixth Edition).
2. Mishkin, Frederic S., (2001), The Economics of Money, Banking and Financial Markets (Sixth edition). Addison Wesley, New York.
3. Patinkin Don, Money, Interest and Prices, Harper and Row Publishers, (Latest Edition).

Assesment Criteria

• Mid Term Exam: 30 Marks
• Final Term Exam: 50  Marks
• Sessional: 20 Marks
  • Project: 50%
  • Presention: 30%
  • Class Participation: 20%