Portale di Ateneo - En.Unibs.it

The course analyses the functioning and equilibrium of foreign exchange markets. We examine, on both theoretical and empirical grounds, the determination of the exchange rate, the international transmission of macroeconomic shocks and policy coordination, the time inconsistency of exchange rate regime; the operation and evolution of the International Monetary System.

1. Origins, development and functions of money. The creation of money in Brescia in the Middle Age. Money as medium of exchange, measure of value and stock of value. Market organization, imperfect knowledge and the role of money. The birth of money in a prison camp.
2. The monetary base: definition, creation and use in the institutional settings of pre-euro Italy and in the EMU.
3. Liquidity and interbank rates; equilibrium in the market for the monetary base.
4. From the creation of the monetary base to the supply of money.
5. Equilibrium in the monetary market and the role of monetary policy in an economy without financial assets and interest rates (the Quantity Theory of Money Demand).
6. Introduction to financial assets and interest rates:
i) General Introduction
ii) The key properties of interest rates
iii) Financial asset prices and interest rates
iv) Inflation and interest rates
v) The term structure of interest rates
vi) Interest rates and usury laws
7. Keynes' and Baumol's thoeries od the demand for money: Demand for money in a world with financial assets without uncertainty.
8. Elements of portfolio theory. Uncertainty, financial assets, money demand.
i) Tobin's theory of money demand
ii) Friedman's theory of money demand
9. Money demand: from theory to empirical evidence.
10. The interaction between money supply and demand: compact and extended analysis of monetary policy transmission mechanism under fixed and flexible exchange rates.
11. Instruments and objectives of monetary policy: pre-euro Italy and EMU.
12. Discretion and rules in the conduct of monetary policies. Time inconsistency.
13. Origins, development, functions and institutional setting of central bank.
14. Efficiency, welfare and the optimal quantity of money. The costs of deflation and inflation.
15. Financial crises and monetary theory.