Money and Finance

A.Y. 2020/2021
Overall hours
Learning objectives
The aim of the course is to provide a good knowledge and understanding of the effect of monetary policy on output and inflation relying on dynamic general equilibrium models of the economy. Competence is developed regarding: i) the monetary transmission mechanism; ii) financial frictions in credit markets; iii) the objectives and instruments of monetary policy with an emphasis on targeting regimes and policy rules; iv) operating procedures of monetary policy.
Expected learning outcomes
Students are expected to acquire the knowledge of the theory and practice of Monetary Economics and Macroeconomic Finance. In particular, they will be able to understand: i) Monetary policy (analysis, instruments, operating procedures, transmission mechanisms, policy goals and policy effectiveness); ii) financial instruments (bonds of different maturities, structure of interest rates, debt versus equity); iii) financial frictions due to informational asymmetries and their role in the transmission of monetary policy. Students will develop the basic skills for monetary economic analysis with special attention to the modeling of empirical results, the analysis of policy issues and their solution.
Course syllabus and organization

Single session

Lesson period
First trimester
All information will be posted on the course webpage on

Lectures will take place online in synchronous way on the Zoom (or MSTeams) platform according to the timetable provided by the university. Lectures will possibly be recorded and made available to the students to be followed in an asynchronous way. Power point presentations of the lecture contents (slides) will also be available on the course webpage on

The program of the course will not change.

The oral exam will maintain the same structure, and it will be given remotely using the Zoom platform.
Course syllabus
The course offers an introduction to the most important topics in monetary economics and policy, focusing on 'new Keynesian' general-equilibrium models of monetary economies with particular emphasis on the policy implications of these models. It covers the basic theoretical approaches, and discusses the role of sticky prices, expectations and financial frictions for the transmission of monetary policy. Among the topics presented are: objectives and instruments of monetary policy; operating procedures of monetary policy; targeting regimes and policy rules; the term structure of interest rates; informational asymmetries and the credit channel of monetary policy

Introduction - The Basics
· Policy Objectives, Instruments and Operating Procedures
· Money Demand and Money Supply
· The Effects of Money in the AD-AS Model

First Part - New Keynesian Monetary Economics
· Empirical Evidence: Money, Inflation and Output
· Sticky Prices and the Monetary Transmission Mechanism
· Monetary Policy Analysis in New Keynesian Models
· Targeting Regimes and Policy Rules

Second Part - Monetary Policy and Financial Markets
· The Term Structure of Interest Rates
· Asymmetric Information and Credit Rationing
· Financial Frictions and the Credit Channel
Prerequisites for admission
Although there are no formal prerequisites, students are recommended to take Advanced Microeconomics and Macroeconomics.
Teaching methods
Online lectures and review sessions using Zoom. Power Point presentations of the lecture contents will be uploaded on the Ariel webpage of the course.
Lectures present the theory and provide examples of practical applications. Policy issues and solutions are also discussed. Review sessions provide the instruments to solve exercises on the topics addressed in the lectures.
Teaching Resources
Walsh, Carl E., Monetary Theory and Policy (3rd edition), MIT press, 2010.
Chapters: 1, 6, 8, 10, 11.
Power point presentations of the lecture (slides) and further reading will be available on the Ariel webpage of the course.
Assessment methods and Criteria
Oral exam. The exam covers all the topics presented during lectures and review sessions and it consists of open-ended questions which may include explanation, technical analysis and simple exercises.
The exam will be given remotely using Zoom.
SECS-P/01 - ECONOMICS - University credits: 6
Lessons: 40 hours
Professor: Missale Alessandro
Educational website(s)
By appointment; write me a mail
Dipartimento di Economia, via Conservatorio 7, Second floor, Room 5