Applying Monetary Theory and Monetary History

Catalog description

This course provides a framework for the analysis of monetary history. The course objectives are to introduce students to the theoretical framework used by economists to study monetary theory, and to apply that framework in order to explain various monetary systems that have existed in the past. We will examine the empirical evidence, and also consider policy issues in this area. There is scope for re-examining existing analyses of many of those historical systems. Topics discussed in the course include the Federal Reserve control of the money stock, the demand for money, money as part of economic activity, economic indicators and monetary policy, the Lucas critique, interest rates and the frequency at which they are changed, the creation and purpose of central banking, and private banking regulations. Historical monetary events to be discussed include monetary policy before and during the Great Depression, monetary policy during the Great Recession of 2007 - 2009, the gold standard monetary system, the Bretton Woods system, and the termination of these standards. Among all topics, both current and historical, we will examine the incentives of individuals, firms, banks, borrowers, and lenders, and governments as responses to monetary policy changes. Finally, advances in monetary theory based on macroeconomic events, both national and global, will be analyzed. The course will count toward both the major and minor in economics.