Study-unit MONETERY AND FINANCIAL ECONOMICS

Course name Business administration
Study-unit Code 20022906
Location PERUGIA
Curriculum Economia dei mercati e degli intermediari finanziari
Lecturer Amedeo Argentiero
Lecturers
  • Amedeo Argentiero
Hours
  • 42 ore - Amedeo Argentiero
CFU 6
Course Regulation Coorte 2017
Supplied 2019/20
Supplied other course regulation
Learning activities Caratterizzante
Area Economico
Sector SECS-P/01
Type of study-unit Obbligatorio (Required)
Type of learning activities Attività formativa monodisciplinare
Language of instruction Italian
Contents The course aims to provide the student with theoretical and empirical tools for studying the functioning of the money and credit market. The institutional context of reference applies to the European Monetary Union and to the European Central Bank, without letting comparisons with other countries. An initial part of the lessons will be dedicated to the definition of currency and monetary aggregates followed by the economic analysis of European and international monetary institutions. A study of the economic characteristics of money and credit will follow, together with the examination of the instruments and objectives of monetary and credit policies. Finally, the recent regulatory changes related to banking supervision in the European context will be discussed in addition to the new legislation on the issue of popular banks and cooperative credit.
Reference texts Attending students may refer to the following recommended texts:

• M. Bagella (2006). L’Euro e la politica monetaria, Giappichelli Editore, Torino (an updated edition of the text is available in e-book format).


• G. B. Pittaluga (2012). Economia Monetaria, Hoepli Editore, Milano.




Additional references will be provided during lessons



Students who can not or do not intend to attend can refer to one of the two recommended texts for attending students and are invited to contact the Professor by mail (amedeo.argentiero@unipg.it) for further references.
Educational objectives The main objective of teaching is to convey knowledge in the following areas:
• Advantages and disadvantages of an economic system that is based on the single currency issued by one authority;
• Determinants of money demand and liquidity preference as an alternative to financial investments and / or real assets;
• Coin Offering, Money Market Operation and Main Monetary Interest Rates, controlled directly or indirectly by central banks;
• The role of central banks and commercial banks in monetary policy and its transmission mechanisms
• Critical and heterodox readings on the functioning of monetary and financial markets.

The main skills, i.e. the ability to apply the acquired knowledge, should be:
• Know how to frame particular economic and financial phenomena studied in other areas in a more general context of monetary and financial markets
• Learn how to read and interpret the main economic and financial reports issued by national and international monetary authorities
• Provide opinions and make qualitative forecasts on the performance of the monetary and financial markets, interest rates and asset prices
Prerequisites Attending both micro- and macro-economics courses before to apply for monetary and financial economics is strongly recommended. At the beginning of the monetary and financial economics course, students are supposed to have the command on some principles and basic concepts, such as consumer and firm theory, general equilibrium theory, market failures, Keynesian multiplier, IS-LM model, AS-AD model and Phillips curve.
Teaching methods Lectures and Exercises
Learning verification modality Students will be required to take a written and oral exam. The former is made up of 2 open-ended questions, one or two exercises and some closed ended questions. Each question will demand to discuss a specific model of monetary economics, by using both analytical and graphical methods. This examination has the objective to test the acquisition of a basic knowledge and understanding of the essential concepts of modern monetary economics.

The exam will last 1 hour and 30 minutes.
Extended program Concepts and Fundamentals of a Monetary Economy

1. Currency definition and basic concepts


2. Money and Banking Circuitry





Money supply

1. Multiplier of deposits


2.Multiplier of credit


3. Monetary aggregates


4.International monetary systems




The international monetary economy

1. The steps towards the European Monetary Union


2.The European Central Bank


3. Exchange rates


4. Exchange Rates Comparison


5.Following the theory of optimal currency areas




Objective and pillars of European monetary policy

1. Price stability


2.Inflation targeting


3. The monetary targeting








Money question

1. Quantitative coin theory


2. The Neo-Classical Income Formation Model


3. Keynesian currency coinage and preference for liquidity


4. The Keynesian Income Formation Model


5. The Hicksiano IS-LM synthesis model


6.Monetary policy related to the amount of money (type Q)


7. Price-related monetary policies (type P) and the wealth effect




Inflation and deflation

1. Causes


2.Costs


3.Benefits


4.Inflation and Phillips curve




The theory of portfolio choices

1. Microeconomic bases for choices under uncertainty


2.The Tobin model

1. The risk-return schedule


2. The case with a risky business


3.The case of two risky activities





The instruments of monetary policy of the European Central Bank

1. Monetary policy instruments and objectives


2.European Central Bank monetary policy operations


3. The quantitative easing


4. The functioning of auctions for open market operations


5.The interest rate corridor




Monetary policy rules

1. The debate rules vs. discretion


2. Friedman's Rule


3. The McCallum Rule


4.Taylor Rule


5. The rule of Clarida-Galí-Gertler




The mechanisms of transmission of monetary policy

1. The Exchange Rate Transmission Circuit


2. The value of financial assets


3. The Bank Loan Circuit


4. Circuit of credit conditions


5. The Circuit of Expectations


6. The interaction of circuits




Monetary policy and international financial system

1. Macroeconomic and financial effects


2. Tobin's macroeconomic model


3. The real effects of a restrictive monetary policy


4. Financial systems and monetary policy


5. The globalization of financial markets


6. The FED




Financial crises

1. Crises generated by financial markets


2. Monetary Policy and Financial Crises


3. The price structure of the paintings and the bond with the financial and real markets







The functioning of the credit system

1. Structure of the bank balance sheet


2. The risks of the bank

3. The liquidity risk


4. Credit risk


5.The rate risk


6. Operational risk



7. Rationing the Credit


8. Banking Supervision and Credit Policies