Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions (such as medium of exchangestore of value and unit of account), and it considers how money, for example fiat currency, can gain acceptance purely because of its convenience as a public good. The discipline has historically prefigured, and remains integrally linked to, macroeconomics. This branch also examines the effects of monetary systems, including regulation of money and associated financial institutions and international aspects. Monetary Economics aim is to gain insight into more recent approaches to monetary policy, and to developments in understanding and applying such policy. The main objectives of the course will be to understand the role of money in the economy as well as to understand some models where inflation shows persistence, the theory of monetary policy, monetary policy operating procedures and the central banking mechanisms.Monetary Economics course provides students with the theoretical building blocks that are needed for an understanding of the monetary theory and surveys the issues in the present-day monetary policy implementation faced by the central banks. The course equips students with the necessary background to analyze problems involving the determination of interest and exchange rates in the economy as well as with the understanding of what central banks can do to improve the economic performance through the use of the monetary policy instruments.

Learning Outcomes


On successful completion of this course, students will be able to:

  • Define and understand the different concepts of Monetary Economics.
  • To understand the role of money in the economy.
  • An understanding of the links between monetary policy, financial markets and the real economy
  • To understand the Theories of Monetary Economics and apply them to real-world economics.
  • To describe the role of central bank and its performance about commercial banks.
  • To describe the monetary policy strategies implemented by the main central banks
    and to be familiar with how monetary policy decisions are implemented and
    transmitted to the economy.
  • To elaborate concept of inflation and its role in the economy.

Text Book:

1. Bennett T. McCallum, (1989), Monetary Economics, Theory and Policy, McMillan.

2. Fredric S. Mishkin, (1995), Financial Markets and Money, Harper & Row Publishers.

3. Laider, David E.W (1996), The Demand for Money: Theories, Evidence and Problems (Fourth edition), Harper & Row, Publishers, New York.

4. Miller, R. L. and David VanHose, (2001), Money, Banking & Financial Markets. South Western, Singapore.

5.Mishkin, Frederic S., (2001), The Economics of Money, Banking and Financial Markets. (Sixth edition). Addison Wesley, New York.

6.Vanish K., Monetary Theory, (2000), Vikas Publishing House, Delhi.

7.Patinkin Don, Money, Interest and Prices, Harper and Row Publishers, (Latest Edition).

Assessment  Criteria

Mid Term: 30 marks

Sessional: 20 marks

  • Project: 40%
  • Presentation: 30%
  • Participation: 30%

Final Exam: 50 marks

Course Material