25416 Economics of Money and Finance
UTS: Business: Finance and EconomicsCredit points: 6 cp
Subject level: Undergraduate
Result Type: Grade and marksRequisite(s): 25555 Macroeconomics: Theory and Applications AND 25622 Quantitative Business Analysis
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.
Handbook description
This subject encompasses the theoretical aspects of monetary economics as well as its application both to the practice of monetary policy and the prediction of likely future trends in funds flows, credit aggregates and other macroeconomic statistics. Other topics include: special issues dealing with monetary policy in Australia; systemic crises; international comparisons of monetary policy as practised by other central banks; and the prediction of interest rate movements.
Subject objectives/outcomes
On successful completion of this subject students should be able to:
- understand and interpret monetary phenomena in the economy
- understand the principles and practice of monetary policy
- think critically and in particular to compare and evaluate propositions about the workings of the financial system and financial policy.
Contribution to graduate profile
This course extends material covered in Macroeconomics: Theory and Applications. It considers how monetary and financial conditions affect macroeconomic conditions, how interest rates are determined and how monetary policy is conducted.
Teaching and learning strategies
This subject is taught through lectures and tutorials. It refers to Quarterly Statement on Monetary Policy published by the Reserve Bank of Australia in examining the application of the principles of monetary economics in an Australian context. It enables students to track developments in monetary policy stance and the economy in Australia.
Content
- Monetary issues in the Australian economy
- Neoclassical and Keynesian models of a monetary economy
- Theories of money demand
- Money supply formation processes and credit rationing
- Theories of interest rate determination
- Theories of inflation and money neutrality
- The Phillips Curve and Expectations Augmented Phillips Curve
- The transmission of monetary impulses
- Australian policy experience and inflation targeting.
Assessment
Assessment item 1: Essay (Individual)
| Objective(s): | 1-3 |
| Weighting: | 30% |
| Task: | This assessment is designed to develop and test students' ability to think critically about the structure of monetary theory and how that theory may be applied to understand current monetary phenomenon including policy. It thus indirectly tests objectives 1-3. |
Assessment item 2: Class Tests (Individual)
| Objective(s): | 1 |
| Weighting: | 10% |
| Task: | Class tests examine the theoretical topics covered in the subject in an ongoing way and assist in evaluating the development of students' understanding of monetary phenonena under objective 1. They also provide on-going feedback on student performance throughout the semester. |
Assessment item 3: Final Examination (Individual)
| Objective(s): | 1-3 |
| Weighting: | 60% |
| Task: | The final examination assures objectives 1, 2 and 3. It requires students to shown an appreciation of the theoretical content of the subject and a wholistic understanding of monetary theory and its policy applications. It thus provides an opportunity to test the skills students have developed. |
Required text(s)
Mishkin F.S. (2007), The Economics of Money, Banking and Financial Markets, 8th edition, Boston: Pearson-Addison Wesley.
Recommended text(s)
Cecchetti S.G. (2008), Money, Banking and Financial Markets, 2nd edition, New York: McGraw Hill.
Mishkin F.S. & Eakins S.G. (2006), Financial Markets and Institutions, 5th edition, Boston: Pearson-Addison Wesley.
Indicative references
Newman P., Milgate M. & Eatwell J. eds. (1992), The New Palgrave Dictionary
of Money and Finance, London: Macmillan.
Important official reports that contain relevant information include:
The Reserve Bank of Australia's Statement on Monetary Policy and Financial Stability Review can be accessed at www.rba.gov.au
