Macroeconometric Applications on Monetary Policy (ECON444)

Content

Objective

This course is designed to expose students the problems that affect the performance of monetary policies and to apply different macro econometric methods to measure the effectiveness of monetary policies and to analyze empirically the factors that can disrupt this effectiveness.

Course Content

The main objective of monetary policies is to assure the price stability by inflation-unemployment arbitrage. Otherwise, the performance of monetary policies depends on the level of credibility and a problem of credibility can result from a time inconsistency. That’s why, the credibility will be analyzed and measured at first. The success and effectiveness of monetary policies are also linked to the choice of policy instruments and the timely and effective use of these instruments. Central banks summarize through which channels policy instruments influence macroeconomic variables, in the transmission mechanism. The expectations channel and its effectiveness will be discussed based on the time series analysis. The 2008 crisis showed that discretion was unable to assure financial stability and then the unconventional policies replaced traditional monetary policies by an inflation-financial stability arbitrage. These policies will be investigated as well and the effectiveness of macroprudential policy instruments will be measured within the framework of VAR analysis and ARCH-GARCH and VECM models.

Weekly Contents

Theory Topics
Week	Weekly Contents
1	Introduction: Monetary Policy
2	Monetary Policy and Expectations: Expectations Channel in the Transmission Mechanism
3	Monetary Policy and Expectations: Empirical Analysis
4	Monetary Policy and Expectations: Empirical Analysis
5	Monetary Policy and Expectations: Application on Stata
6	Presentations
7	Arbitrage on inflation-unemployment: Time inconsistency: why a source of the problem of credibility?
8	Arbitrage on inflation-unemployment: How to measure the credibility?
9	Arbitrage on inflation-unemployment: Application on Stata
10	Presentations
11	Arbitrage on inflation-financial stability: Unconventional Monetary Policy
12	Arbitrage on inflation-financial stability: Effectiveness of macro prudential policy
13	Arbitrage on inflation-financial stability: Application on Stata
14	Application on Stata

Assessment System

Contribution to Overall Grade
Activities	Number	Contribution
Contribution of in-term studies to overall grade	3	45
Contribution of final exam to overall grade	1	55
Total	4	100

In-Term Studies
Activities	Number	Contribution
Assignments	0	0
Presentation	3	45
Midterm Examinations (including preparation)	0	0
Project	0	0
Laboratory	0	0
Other Applications	0	0
Quiz	0	0
Term Paper/ Project	0	0
Portfolio Study	0	0
Reports	0	0
Learning Diary	0	0
Thesis/ Project	0	0
Seminar	0	0
Other	0	0
Total	3	45

Relation of Proficiency

No	Program Learning Outcomes	Contribution
No	Program Learning Outcomes	1	2	3	4	5
1	Demonstrate a basic knowledge of different economic theories and main discussions driving current theoretical approaches					X
2	Demonstrate ability to use basic qualitative and quantitative methods to asses different economic questions of applied fields					X
3	Show a sound understanding of current economic discussions and problems					X
4	Have an effective and clear communication in written and oral formats in different public and professional contexts.					X
5	Demonstrate basic knowledge of the world economic history and a sound knowledge of the Turkish economic history					X
7	Demonstrate knowledge of standard quantitative techniques and empirical models used in economics					X
8	Show ability to apply basic economic theory to an applied topic					X
9	Show a basic understanding of analytical methods, both theory- and model-based					X
10	Show ability to use economic concepts to discuss current economic issues				X
11	Reason logically and work analytically					X
12	Show awareness on social aspects of the economics in different applied and theoretical fields			X
13	Identify appropriate economic models to analyse problems					X
16	Show understanding of basic statistical and econometric concepts and ability to apply basic concepts to own empirical work					X
17	Demonstrate a sound knowledge of the current economic issues in Turkey and a general knowledge of the issues in the world economy				X

ECTS

Activities	Number	Period	Total Workload
Class Hours	14	3	42
Working Hours out of Class	8	8	64
Assignments	0	0	0
Presentation	3	9	27
Midterm Examinations (including preparation)	0	0	0
Project	0	0	0
Laboratory	0	0	0
Other Applications	0	0	0
Final Examinations (including preparation)	1	8	8
Quiz	0	0	0
Term Paper/ Project	0	0	0
Portfolio Study	0	0	0
Reports	0	0	0
Learning Diary	0	0	0
Thesis/ Project	0	0	0
Seminar	0	0	0
Other	0	0	0
Total Workload			141
Total Workload / 25			5.64
Credits ECTS			6