MONETARY POLICY
The exam for the Monetary policy course will be held on Tuesday, September 5, 2023. at 11:00 a.m. in the office of prof.dr.sc. Marijana Ivanov (office no. 106 in old building). The exam will be in oral form.
Learning resources:
- Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley/ Prentice Hall/ Pearson Education ....., 2009.........2013, ... 2015
- Lectures (Presentations and other sources)
Introduction - link (4.10.2016.)
- Method of assessment and schedule (2016/17): Topics of lectures - link (4.10.2016.)
TOPICS INCLUDED IN THE FIRST MIDDLE TEST:
LECTURE 1 - link (4.10.2016., 11.10.2016.)
Case study: Swedish monetary standards in a historical perspective - link on the full text
Characteristics of money - link
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
- Chapter 3: What Is Money?HOMEWORK: What characteristics distinguish money from other stores of wealth?
Aticles on the Interet: "Asset Class", "5 Assets Wealthy People Use to Preserve Wealth", What items are considered liquid assets?", ....
LECTURE 2 - link (11.10.2016.)
LECTURE 3 - link (18.10.2016.)
Bond Pricing - link
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
- Chapter 1: Why Study Money, Banking and Financial Markets?
LECTURE 4 - link (25.10.2016.)
LECTURE 5 - link (8.11.2016.)
Risk management in banking - link (voluntary reading)
Example (Bank of Hawaii - Annual Balance Sheet) - link (voluntary reading)
Voluntary reading: Overview: Banks Create Money - (doc)
HOMEWORK : Example 5 and 6
LECTURE 6 - link (15.11.2016.)
See more: Mishkin, F.S.: Chapter 15: "The Money Supply Process" (voluntary reading)
HOMEWORK: There are many factors that can influence on the process of money creation (slide no. 35).
LECTURE 7 - link (22.11.2016.) - Demand for money (Monetary theory)
Exercise 1 and 2 - link NEW - Answers: Exercise - demand for money - link (23.11.2016.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
- Chapter 20: Quantity Theory, Inflation, and the Demand for Money
TOPICS INCLUDED IN THE SECOND MIDDLE TEST:
LECTURE XX-1 Overview of the Federal Reserve System - link 1 (29.11.2019.)
LECTURE XX-2 Conducting Monetary Policy Overview of the Federal Reserve System - link 2 (29.11.2019.)
LECTURE 8 - link (6.12.2016.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
LECTURE 9 - link (13.12.2016.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
LECTURE 10 (20.12.2016.):
LINK 1 (20.12.2016.)
LINK 2 (20.12.2016.)
Exercise 1 - link (20.12.2016.) NEW - Answers: Exercise - goals of monetary policy - link (20.12.2016.)
Lecture 11: link (10.01.2017.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 23: "Transmission Mechanisms of Monetary Policy: The Evidence"
Lecture 12-1: link (10.1.2017) - ECB
Lecture 12-2: Guest lecture (17.1.2017.) - Dr.sc. Maroje Lang
Lecture 12-3: link 1 (17.1.2017.) ; link 2 (17.1.2017); link 3 (17.1.2017.); link 4 (17.1.2017.); link 5 (17.1.2017.) - CNB
Lecture 12-4: link (24.1.2017.)
Voluntary reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 17: "The Foreign Exchange Market: Exchange Rates and Applications"
- Chapter 18: "The International Financial System"
Lecture 12-5: - link (24.1.2017.)
Voluntary reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 18: "The International Financial System"
LINK 1 (24.1.2017.) - Basket of currencies determines the value of the SDR - the 2015 rewiev
Old materials:
Lecture 1 - link (6.10.2015.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013 (Tenth Edition), Chapters:
- Chapter 1: Why Study Money, Banking and Financial Markets?
- Chapter 3: What Is Money?
Lecture 2 - link: (13.10.2015.; 20.10.2015.)
Lecture 3 - link (27.10.2015.)
Lecture 4 -link (27.10.2015.)
Lecture 5 - link NEW (3.11.2015.; 10.11.2015.)
additionally: factors that affect the bank's lending capacity LC=(1- q - r)*DSD + (1- q)*TD + B + K - S
Homework : Example 5 and 6
Example (Bank of Hawaii - Annual Balance Sheet) - link (voluntary reading)
Voluntary reading: Overview: Banks Create Money - (doc)
Appendix to Lecture 3-5 - link (Risk management in banking; Asset-liability missmach; )
Lecture 6A - link: (17.11.2015.) additionally: factors that affect the monetary base M0: M0 = PE + FXT + ONI (symbol PE - central bank loans to banks - connected with discount window policy; FXT foreign currency transactions between central bank and banks; ONI other net-items like government securities in asset of CB account connected with open market operations as the instrument of monetary policy)
TOPICS FOR SECOND MIDDLE TEST
Lecture 6B - link : (8.12. 2015.) - all topics will be included in the second middle test
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013. Chapters:
- Chapter 11: Banking and the Management of Financial Institutions (The Bank Balance Sheet, Basic Banking, General Principles of Bank Management)
- - Appendix link
Voluntary reading: Factors Affecting Reserve Balances
Lecture 7: (8.12.2015.) - all topics will be included in the second middle test
- additionally: factors that affect the money supply M1: M1 = NFA + DC - NML
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2013. Chapters:
- Chapter 15: The Money Supply Process (Tree Players in the Money Supply Process, The Fed's Balance Sheet, Control of the Monetary Base, Multiple Deposit Creation: A Simple Model, Factors that Determine the Money Supply, Overwiew of the Money Supply Process, The Money Multiplier)
- Chapter 16: Tools of Monetary Policy (whole chapter)
- - Appendix link
Lecture 8: (8.12.2015.; 15.12.2016.)- all topics will be included in the second middle test
- additionally: factors that affect the monetary base M0: M0 = PE + FXT + ONI
- additionally: factors that affect the money supply M1: M1 = NFA + DC - NML
Lecture 9 NEW (12.1.2016.) - all topics will be included in the second middle test
Lecture 10: (26.1.2016.)
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 23: "Transmission Mechanisms of Monetary Policy: The Evidence"
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 21: "Monetary and Fiscal Policy in the ISLM Model" only pp 546-559 - topics will be included in the second middle test
- Chapter 25: "Rational Expectations: Implications for Policy"
Appendix 1 to the Lecture 10: link - (26.1.2016.)
Appendix 2 to the Lecture 10: link (26.1.2016.)
Appendix 3 to the Lecture 10: link NEW (19.1.2016.) - all topics will be included in the second middle test
Lecture 11: link (19.1.2016.) - all topics will be included in the second middle test
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 17: "The Foreign Exchange Market: Exchange Rates and Applications"
- Chapter 18: "The International Financial System"
Lecture 12: (19.1.2016.) - all topics will be included in the second middle test
Required reading: Mishkin, F.S.: «The Economics of Money, Banking and Financial Markets», Pearson Addison Wesley, 2010. Chapters:
- Chapter 18: "The International Financial System"
Lecture X: prof.dr.sc. Ivan Ribnikar
CONTENT:
UNDERSTANDING MONEY AND ITS HISTORICAL DEVELOPMENT
Functions, forms and characteristics of money. Historical development of currency systems. Deposit money – credit money.
THE ROLE OF BANKS IN THE PROCESS OF THE CREATION OF MONEY
Monetary institutions. Bank's balance sheet. Lending capacity of banks. Limits of credit expansion.
BANK RESERVES, MULTIPLICATION OF DEPOSITS AND CREDIT EXPANSION
Functions of liquidity reserves for commercial banks and monetary system. Required reserves. Micro–multiplication of deposits. Macro–multiplication of deposits. Deposit and credit multipliers.
MONEY SUPPLY
Monetary system balance sheet. Credit channel of money issue. Commercial banks’ foreign currency transactions. Changes in non-monetary liabilities. Monetary aggregates. Analysis of the structure of the monetary aggregates in the Republic of Croatia, the European Union and the United States of America.
THE OBJECTIVES AND INSTRUMENTS OF MONETARY POLICY
Dilemmas about key objectives of monetary policy. Price stability. Open market policy. Re-financing policy. Required reserves policy. Other instruments of monetary regulation.
MONETARY POLICY OF THE CROATIAN NATIONAL BANK, THE EUROPEAN CENTRAL BANK AND THE FEDERAL RESERVE SYSTEM
Instruments and measures of monetary regulation used by the CNB, ECB and FED. The European Monetary Union.
THE EFFECTS OF MONETARY POLICY ON FINANCIAL MARKETS AND ON SHIFTS IN THE REAL SECTOR OF THE ECONOMY
Changes of interest rates, exchange rate, yield on securities. The role of money in the economic activity. Transmission mechanism of monetary policy.
MONEY AND INFLATION
Demand-pull inflation. Cost-push inflation. Psychological components of inflation. Inflation - causes and consequences.
MONETARY AND EXCHANGE RATE POLICY
Economic and monetary aspects of exchange rate. Possibilities and constraints of the exchange rate policy.
INTERNATIONAL MONETARY SYSTEM
Historical development and problems. The International Monetary Fund. The IMF’s functions and objectives. The role of the IMF in the prevention of financial crises. The exchange rate systems in the International Monetary System.