Programme PGP Term IV Academic Year 2021-22

Course title Monetary Theory and Policy Area Economics Credits 1.00

Prof. Errol D'Souza

Course Description & Objectives
This course builds on the first year Macroeconomics and Economic Policy (MEP) course and covers select topics in monetary theory. The objective is to provide participants a framework to understand the debates surrounding the theory and practice of monetary policy today. 

After reviewing the IS/LM, AD/AS framework introduced in MEP, the course starts off with the instrument problem facing a central bank and goes on to consider the “rules vs. discretion” debate. Next we look at the transmission channels through which monetary policy works and study the usefulness of Taylor rules in practice. After looking at the linkages of monetary policy with the fixed-income market and the role of quantitative easing in financial crisis, the course ends with a discussion of “inflation targeting” as a framework for monetary policy.