This course revolves around monetary policy and its transmission mechanism to the macroeconomy. Theoretically, it covers both the theoretical background of the standard AS-AD model, but also the standard Ney Keynesian macroeconomic model. We analyse how monetary policy affects macroeconomic variables through the lense of both models with a focus on the transmission mechanism of monetary policy. We also discuss distributional aspects of monetary policy in the Euro area – between separate Euro area member states, but also in terms of the effects of monetary policy on income and wealth inequality between households. We discuss studies on the effects of monetary policy on the labour market and on the recent inflation shock in the euro area. 

We then also delve into the practical implementation of monetary policy. We examine a number of studies on the effects of unconventional monetary policy, namely on Quantitative Easing (QE), Forward Guidance and other central bank interventions. We compare the decision-making process at the US Federal Reserve and the European Central Bank and discuss the different performance, tools and recent decisions of both leading central banks. Important episodes of market stress after the financial crises in 2008 are covered to better understand how central bank interventions guide financial markets and the wider economy. At the end of the course, students are well equipped to discuss the detailed literature on the role and effects of monetary policy for the macroeconomy, as well as give practical examples and analyse ongoing development on financial markets.

Physical presence is the rule, in specific cases also online formats are possible.

Assessment will be based on (i) regular attendence and active participation in class [10%] (ii) fulfilment of the regular assignments (homework) [20%] (iii) an interim exam after the lectures on basic theoretical concepts and current empirical research [30%] (iv) oral presentations of group work on specific cases of industrial policy [40%]