Economics 522, Monetary Institutions and Policy:
Topics in Monetary Policy

A second-year graduate topics course on Monetary Policy in the Spring 1999 Graduate Program, Department of Economics, Princeton University.

Teacher: Lars E.O. Svensson, Visiting Professor, 1999-2000.
Office: 105 Fisher Hall. Phone: 258-2674. Email: Svensson@Princeton.edu

Office Hours: By appointment.

Secretary: Sharon Ernst. Office: 303 Fisher Hall, Phone: 258-4048, Email: SErnst@Princeton.edu.

Schedule: Tuesday, 1:00-4:00 pm, B-06, Fisher Hall.
First class: Feb 1, 2000. Last class: April 25. No class on Mar 14.

Prerequisites: Students are expected to be familiar with the material in Economics 521, Part II, Foundations for the Analysis of Monetary Policy (Reading List, PDF), taught by Michael Woodford in the Fall 1999 Graduate Program.

Topics: A preliminary list of topics to be covered includes:

  1. A framework for analysis of monetary policy
  2. The evolution of monetary policy rules
  3. Inflation-forecast targeting
  4. Price-level targeting
  5. Commitment, discretion and optimal delegation
  6. Credibility, reputation and transparency
  7. Uncertainty about the state of the economy and the transmission mechancism
  8. The transmission mechanism and the role of money
  9. Monetary policy issues for the Eurosystem
  10. The zero bound, deflation and liquidity traps (Bank of Japan)
  11. Monetary policy in open economies

Lecture notes: Lecture notes (copies of overhead slides) will be available before each class on this page, as pdf files. Students are expected to download and print these before each class.

Lecture notes 1
Lecture notes 2
Lecture notes 3
Lecture notes 4
Notes on optimization under commitment and discretion (Rev Feb 27, somewhat generalized)
Lecture notes 5 (Rev Mar 22, some typos corrected, some clarification of CIR forecasts)
Inflation Report, Dec 1999, Sveriges Riksbank
Minutes of Executive Board Meeting, Feb 3, 2000, Sveriges Riksbank
Credibility of Riksbank's inflation target
Inflation Report, Mar 2000, Sveriges Riksbank (with Material for Assessing Monetary Policy 1997-99, p. 63-71)
Lecture notes 6 (Rev Mar 22, some typos corrected)
Lecture notes 7 (Rev Mar 22, some typos corrected)
Lecture notes 8
Lecture notes 9
Robust control made simple (Rev Apr 12, some typos corrected) 
Lecture notes 10
(Rev Apr 12, some corrections)
Lecture notes 11 (Rev Apr 23, some typos corrected)
Lecture notes 12 (Rev May 1, some typos corrected)

Announcement: 
Please submit lists of remaining typos/corrections by email or in my mailbox no later than Tuesday, May 2.

Problem sets: In order to allow students to test their understanding of some of the issues dealt with in the course, I have prepared a couple of problem sets.

Problem set 1 (Rev Apr 12, typos corrected)
Problem set 2

Readings: Reading list, Final, Rev Apr 24
One and two stars denote required readings. Items with two stars should be read very thoroughly; items with one star can be read less thoroughly. No star denotes suggested readings for further studies.

Students are expected to download most of the readings from the web.

NBER Working Papers can be downloaded here.
My papers can be downloaded from my homepage.
Mike Woodford's papers can be downloaded from his homepage.
Articles a few years old in several journals (including AER, Econometrica, JEP) can be downloaded from JSTOR.
Articles in many North-Holland Journals (including EER, JME) can be downloaded here.
Central-bank working papers and articles can be downloaded from each bank.
IMF working papers and other publications can be downloaded here.
Some restricted material is be available here (user id and password announced in class).
More downloads.
Also, check the homepages of authors, also for updates and new work.

The papers and articles that cannot be downloaded will be made available to students separately.

Errors: Please email me about errors, for instance in the reading list and URLs.

Links:
Central banks | Bernkopf's list of central banks | NBER Working Papers | Personal homepages

 

LS Home | Graduate Program | Department of Economics

Revised May 25, 2000.