Monetary theory and policy
Dr Kaludura Abayasiri-Silva
6 points * 3 hours per week * First, second semester * Caulfield * Prerequisites: FIN1710 and FIN2710
Objectives On successful completion of this course students should be able to use an analytical framework to evaluate the role of monetary policy in macroeconomic policy at an intermediate level; understand the input of a floating exchange rate on the effectiveness of monetary policy; understand the role of the Reserve Bank in the implementation of monetary policy.
Synopsis A review of the Keynesian model of income determination; the development of an analytical framework as the basic tools for analysis of the macroeconomic input of monetary policy; implementation of monetary policy by the Reserve Bank; the relationship between inflation and unemployment; the role of the balance of payments and the exchange rate in the evaluation of monetary policy; the interaction between the money market, the market for goods and services and the labour market; the optimal mix of monetary and fiscal policy.
Assessment Assignment (2000 words): 30% * Final examination (2 hours): 70%
Prescribed texts
Gordon R J Macroeconomics 6th edn, Harper Collins, 1993
Maxwell P and Hopkins S Macroeconomics: Contemporary Australian readings 2nd edn, Harper Educational, 1993