Monetary Thought and Policy (HT)

Trinity College Dublin

Course Description

  • Course Name

    Monetary Thought and Policy (HT)

  • Host University

    Trinity College Dublin

  • Location

    Dublin, Ireland

  • Area of Study

    Economics, Finance

  • Language Level

    Taught In English

  • Prerequisites

    EC2010

  • Course Level Recommendations

    Upper

    ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.

    Hours & Credits

  • ECTS Credits

    10
  • Recommended U.S. Semester Credits
    5
  • Recommended U.S. Quarter Units
    7
  • Overview

    • Mercantilism ? The Midas fixation of the early writers; ?the fear of goods and love of money' complex; the misinterpretation of Sir Thomas Mun by Adam Smith and John Maynard Keynes. Should countries run balance of payments surpluses? Is economic activity a zero sum game? Was mercantilistic monetary policy an aggressive or defensive strategy?
    • Sir William Petty and the creation of macroeconomics. Verbum Sapienti . National income measurement. The national income identity. The distinction between wealth and income. The introduction of the velocity of circulation into the quantity theory.
    • The monetary economics of John Law in the Essay on a Land Bank and Money and Trade . Money demand and money supply. Inflation in a money demand/money supply model. The circular flow of income. The law of one price. Intrinsically valuable money versus fiat money.
    • John Law's implementation of his monetary theory as monetary policy in France during the Mississippi System.
    • Financial bubbles. Were the Dutch tulipomania, the Mississippi System and the South Sea speculation examples of financial bubbles?
    • Macroeconomic model building in Richard Cantillon's Essay on the Nature of Trade in General . The discovery of the entrepreneur. The circular flow of income. The black box transmission mechanism. The monetary approach to the balance of payments. How to use monetary theory to make a fortune, the case of Richard Cantillon.
    • Sects and economics . The creation of a new sect called 'les économistes' by Gournay and Quesnay. François Quesnay and Physiocracy. How to zig-zag your way through the tableau économique? Economic activity no longer a zero sum game - the potential for economic growth.
    • The rise of monetarism. David Hume on the way money influences inflation and the balance of payments. Profits and the rate of interest. The link between Hume and Milton Friedman. Joseph Massie on the natural rate of interest.
    • Turgot on the role of savings and capital formation. The determination of the rate of interest.
    • Is there goodness in greed? Adam Smith and the Wealth of Nations. Smith's approach to monetary economics.
    • Henry Thornton's monetary theory. An analysis of the three Mr. Thorntons in The Paper Credit of Great Britain. Ricardo on money. The bullionist controversy.
    • The transformation of economics into the dismal science. Malthusianism and the iron law of wages. The rise of the invisible hand, the use of the Walrasian auctioneer and the demise of the entrepreneur.
    • The return of the Schumpeterian entrepreneur . Innovations, creative destruction, the link between entrepreneurs and bankers.
    • The equation of exchange. Irving Fisher on the quantity theory of money. The Cambridge approach.
    • ?In the long run we are all dead' . Keynes is certainly dead but what about his theory? Which theory? Fundamentalist, hydraulic or reconstituted reductionism?
    • Clower and Leijonhufvud's reinterpretation of Keynes. The new Keynesianism.
    • The Phillips Curve and its demise. Friedman and the role of monetary policy. Rational expectations.
    • New Classical Macroeconomics Mark 1 and Mark 2.
    • The macroeconomics big board. Monetary targets, inflation targets.
    • Current monetary policy. What are banks? Why did the sub-prime crisis occur? Securitisation of assets, pass the parcel and off balance sheet activities. The new world of finance. Moral hazard and the role of central banks.
    • The near collapse of the Irish financial system. Ireland?s four crises ? the property market crisis, the banking crisis, the fiscal crisis and the financial crisis.
    • The use of Minsky?s financing phases to analyse the collapse of the banking system.
    • The events of September 29, 2008. Where there other policies that should have been introduced?
    • November 2010 ? the arrival of the Troika.
    • The way forward.
    • Central Banks. The role of the European Central Bank, the Bank of England and the Federal Reserve System.

Course Disclaimer

Courses and course hours of instruction are subject to change.

Credits earned vary according to the policies of the students' home institutions. According to ISA policy and possible visa requirements, students must maintain full-time enrollment status, as determined by their home institutions, for the duration of the program.

ECTS (European Credit Transfer and Accumulation System) credits are converted to semester credits/quarter units differently among U.S. universities. Students should confirm the conversion scale used at their home university when determining credit transfer.

Please reference fall and spring course lists as not all courses are taught during both semesters.

Please note that some courses with locals have recommended prerequisite courses. It is the student's responsibility to consult any recommended prerequisites prior to enrolling in their course.