Not currently offered

Credit points: 15

Subject outline

In this subject, students will examine the effects of monetary variables on the macroeconomy and develop an understanding of the theoretical basis for the conduct of monetary policy, at an advanced undergraduate level. Topics in this unit include the determinants of money supply, theories of the demand for money and the transmission mechanism of monetary policy. The conduct and design of optimal monetary policies in closed and open economies will also be discussed together with the problem of time inconsistency in the implementation of monetary policy and the associated "rules versus discretion" debate.

SchoolLa Trobe Business School

Credit points15

Subject Co-ordinatorDarren Henry

Available to Study Abroad StudentsYes

Subject year levelYear Level 4 - UG/Hons/1st Yr PG

Exchange StudentsYes

Subject particulars

Subject rules

Prerequisites ECO3EGS OR ECO3MAA


Incompatible subjectsN/A

Equivalent subjectsN/A

Special conditionsN/A

Learning resources


Resource TypeTitleResource RequirementAuthor and YearPublisher
ReadingsThe economics of money, banking and financial markets.PrescribedMishkin, F.PEARSON EDDISON WESLEY, 2013

Graduate capabilities & intended learning outcomes

01. 1. Write concise explanations of the theories relevant to monetary economics, including the use of mathematical expressions where appropriate; use T]accounts and mathematical expressions/ derivations to explain the money supply process.


02. Describe, discuss and critically evaluate, in writing, the conduct of monetary policy (including goal setting, the use of tools, strategies and tactics) and the policy transmission mechanisms using graphical and mathematical techniques, where appropriate.


03. Identify and apply appropriate models/ concepts to analyse issues, assess policy choices and solve computational problems in monetary economics using mathematical and graphical techniques.


04. Analyse the possible causes and dynamics of financial crises; discuss how the behaviour of financial institutions in balancing profit maximisation and risk mitigation/management can affect the stability of financial as well as the real sectors.


05. Write concise explanations of how the concept of asymmetric information shapes the structure of financial systems and creates the need for financial regulation and the provision of government safety nets.


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