COURSE OUTLINE FOR MONETARY ECONOMICS

 COURSE OUTLINE.

INTRODUCTION

·         Definition of Monetary Economics

·         Definition of Money.

·         Functions of Money.

·         Evolution of the Payment System.

DEMAND FOR MONEY

·         The Quantity Theory of Money

·         The Keynesian Theory of Demand for Money.

·         Friedman’s Modern Quantity Theory of Demand for Money

·         Distinction between Friedman and Keynesian Theories of Demand for Money.

·         Empirical Evidence on the Demand for Money

SUPPLY OF MONEY

·         Deposit Creation - Simple Model

·         Limitations or Critique of the Simple Model

·         The Money Supply Model.

·         Determinants of Money Supply.

FINANCIAL MARKETS AND INTEREST RATES

·         Types of Financial Markets.

·         Financial Market Efficiency.

·         Factors Determining the Level of Interest Rates.

·         Term Structure of Interest Rates.

THE IS-LM MODEL

·         Equilibrium in the Goods Market: The IS Curve.

·         Equilibrium in the Money Market: The LM Curve.

·      Simultaneous Equilibrium in the Goods and Money Markets; Algebraic Treatment.

·         Fiscal and Monetary Policy changes in the IS – LM Model.

·         Relative Effectiveness of Fiscal and Monetary Policies.

·         Monetary Targeting versus Interest Rate Targeting.

·         Monetary Targeting in Ghana

MONEY AND INFLATION

·         Theories of Inflation

·         Inflation Targeting Policy with Application to Ghana

·         Causes and Solutions of Inflation in Ghana.

Financial Liberalization

·         Financial Repression in Developing Countries

·         McKinnon (1973) and Shaw (1973) Theories of Financial Liberalisation

·         The Financial Sector Reforms in Ghana (elements and impact assessment)

Guide to Final Examination and Assessments

The final examination shall be a two and half hour paper divided into two sections (A and B). Candidates will be expected to attempt two questions in section A (compulsory section) and attempt 1 out of 3 questions in section B.

The Interim Assessment (IA) shall comprise Class Assignment, Class Tests, Term Paper and Class presentations.

Allocation of Marks shall be as follows:

Final examination                            70%

Interim assessment                         30%

Total                                            100%

READING LIST

BASIC TEXTS

Ahiawodzi, A. K. (2011), Monetary economics, Accra: Bigmike Publications

Mishkin, F. S. (2007). The economics of money, banking, and financial markets, Boston: Pearson Addison Wesley

Fry, M. J (1995), Money, interest, and banking in economic development, Baltimore: