University of Technology Sydney

23505 Economics of Monetary Policy and Central Banking

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2024 is available in the Archives.

UTS: Business: Economics
Credit points: 6 cp

Subject level:

Undergraduate

Result type: Grade and marks

Requisite(s): 23568 Intermediate Macroeconomics
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Anti-requisite(s): 23418 Economics of Money and Finance

Description

This subject equips students with the conceptual tools needed to thoroughly understand and analyse the operations of monetary policy, central banking and associated financial regulation. It develops and extends the treatment of models in Intermediate Macroeconomics that are crucial for such an understanding and it applies these models to the challenges faced by central banks in the conduct of monetary policy. It also considers how the nature of central banking has been changing in recent years, and the interaction between monetary policy and other forms of financial and prudential regulation. This includes the management of overall financial system risk, the possibility of financial crises, and the emergence of macro-prudential regulation. Students explore these issues at the same time as developing their written communication skills.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. articulate the role of central banks within the macroeconomy and analyse the challenges of implementing monetary policy using appropriate formal models
2. explain the nature and causes of financial crises, and critique various policies that have been advocated to limit the occurrence and effects of such crises
3. critically reflect on the changing nature of central banking in recent years and assess complications that have emerged between the operation of monetary policy and other forms of financial regulation
4. effectively communicate their explanations and analysis of monetary phenomena in written form

Contribution to the development of graduate attributes

This subject develops the ability of graduates to critically analyse macroeconomic phenomenon and the implications these phenomena have for the operation of monetary policy and central banking. Students will thus graduate with the ability of using familiar frameworks to provide well-reasoned insight into the challenges faced by central banks. Their knowledge of recent developments in the nature of central banking will also be enhanced so that they will be able to contextualise new developments that emerge and bring appropriate frameworks to bear on making sense of them and thus contributing to the formulation of appropriate policy responses. They will also have advanced skills in written communication.

This subject contributes to the development of the following graduate attribute(s):

  • Intellectual rigour and innovative problem solving;
  • Communication and collaboration;
  • Professional and technical competence

Teaching and learning strategies

This subject makes use of: well-designed, modular recorded lecture material available online; interactive in-class discussion; problem-based learning; and intensive writing tasks that integrate subject–based material with explicit reflection on effective writing strategies. 50% of the assessment for this subject will be derived from a substantial piece of individual student writing that applies a number of frameworks from monetary economics to either a policy issue of current significance or a conceptual issue with important policy implications. Face to face classes will support students through this writing process by providing opportunities for students to discuss issues arising from their writing with other students and the lecturer. This discussion will be built around: in-class analysis of short writing samples; examination of hypothetical and real world policy problems that require the application of conceptual frameworks examined in modular, pre-recorded lecture material available via Canvas; student-led critical reflections on the key literature relevant to the writing tasks; and student peer feedback on draft segments of student writing. Bespoke tasks for each writing task will be set on a class to class basis which students will discuss in table groups as well as with the entire class and the lecturer. Student writing will thus be scaffolded across the semester with class-based, interactive activities that provide opportunites for students to collaborate in understanding and applying conceptual frameworks from pre-recorded lecture material and directed reading, and to share ideas on effective writing strategies under the supervision of the lecturer. Students receive feedback against a range of bespoke criteria on writing drafts during semester, as well as on final assignment.

Content (topics)

  • Advanced frameworks for the determination of output, prices, inflation and employment
  • The nature, characteristics and macroeconomic functions of money
  • Competing explanations of interest rate determination
  • Various approaches to the conduct of monetary policy
  • The nature and causes of financial crises
  • The functions and regulation of financial intermediaries
  • Interactions between monetary policy and other forms of financial and prudential regulation
  • The traditional and changing role of central banks

Assessment

Assessment task 1: In-class Quizzes (Individual)*

Objective(s):

This addresses subject learning objective(s):

1, 2 and 3

Weight: 50%
Criteria:
  • Quiz answers must demonstrate a thorough understanding of relevant concepts and models discussed in the subject;
  • Responses should indicate an ability to effectively apply relevant concepts and models to problems encountered by central banks and financial system regulators;
  • Answers should demonstrate an ability to communicate clearly and effectively in written form in ways appropriate to the context.

*Note: Late submission of the assessment task will not be marked and awarded a mark of zero.

Assessment task 2: Written Assignment (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 50%
Length:

Directions concerning the form and length of the annotated bibliography in Part A will be made available on Canvas. The completed paper in Part B should be a maximum of 2,500 words in length. Assignments which exceed the word limit will be penalised. The examiner will read only the first 2,500 words of any paper and will award marks accordingly.
Criteria:
  • Writing must demonstrate an awareness and understanding of literature relevant to the topic;
  • Writing must effectively apply relevant economic concepts and frameworks to an analysis of issues raised by the topic;
  • Arguments used in the writing must have coherent logical structures that effectively address the topic;
  • Writing must communicate ideas effectively making use of such things as executive summaries, introductions, conclusions, section divisions and exhibits.
  • Papers must satisfactorily conform to standard academic conventions of acknowledging the work of others including appropriate citation and referencing practices.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Recommended texts

Mishkin F.S. (2022), The Economics of Money, Banking and Financial Markets, 13th edition, Boston: Pearson-Addison Wesley.