Module ECON42015: Money and Banking

Department: Business School (Economics and Finance)

ECON42015: Money and Banking

Prerequisites

• None

Corequisites

• EITHER Advanced Financial Theory (ECON41215) OR Advanced Macroeconomics (ECON44815 or ECON41715)

Excluded Combination of Modules

• None

Aims

• give students a sound knowledge of the transmission mechanism of monetary policy via traditional channels, the balance sheet channel, and the bank lending channel
• introduce students to various theories of firm and consumer behaviour under capital market imperfections
• give students an in-depth understanding of the ways in which economic analysis can be used to formulate models of financial decisions
• show students how these models can be tested
• show students how the outcomes of these tests contribute to the understanding of monetary and financial transmission mechanisms

Content

• Topic 1: Monetary policy transmission
• 1.1 Traditional channels of transmission of monetary policy
• 1.2 The credit channel
• 1.2.1 The balance sheet channel
• 1.2.2 The bank lending channel
• Topic 2: The financial system and the corporate sector
• 2.1 Capital market imperfections and investment decisions
• 2.1.1 The Q model approach
• 2.1.2 The Euler equation approach
• 2.1.3 The error correction specification approach and other approaches
• 2.2 Capital market imperfections and inventory accumulation decisions
• 2.2.1 The reduced form approach
• 2.2.2 The linear quadratic model approach
• 2.3 Capital market imperfections and other aspects of firm behaviour
• Topic 3: The financial system and the personal sector: capital market imperfections and consumption

Learning Outcomes

• ability to build on core macroeconomic understanding to explore monetary and financial economics
• detailed understanding of various topical issues in the field of monetary and financial economics
• comprehensive grasp of underpinnings of monetary policy analysis

• ability to apply core advanced economic theory and quantitative methods to applied topics in financial and monetary economics
• ability to identify appropriate economic models to analyse monetary and financial problems
• ability to apply advanced mathematical, statistical and graphical techniques in an appropriate manner
• ability to justify conclusions using economic arguments with appropriate rigour

• ability to show understanding of advanced analytical methods, both theory- and model- based
• ability to show understanding of relevant mathematical and statistical techniques
• ability to reason logically and work analytically
• ability to work with abstract concepts and in a context of generality
• ability to select and apply appropriate techniques to solve problems
• ability to understand the contexts in which problems are addressed
• ability to communicate effectively and clearly in written and oral formats

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

• A combination of lectures, seminars and guided reading will contribute to achieving the aims and learning outcomes of this module. Summative assessment by written examination will test students' knowledge and understanding of the subject-matter and their ability to apply relevant problem-solving and analytical skills.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment:

Work prepared by students for seminars, which will include answers to pre-assigned questions; there will also be discussion of pre-assigned readings.

■ Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University