Summary of all concepts described below, including content from background readings and lines of arguments to be made for answers on exam.
Revision of basic concepts:
* IS-LM Model,
* AD-AS Model,
* Philips Curve.
Week 1: Class questions and answers
Central banks:
* Why does pol...
Topic 0: Revision of basic concepts 4
IS-LM Model 4
AD-AS Model 6
Philips Curve 8
Week 1: Class questions and answers 9
Topic 1 – Central banks 11
Why does political control of monetary policy harm long-run economic performance? 11
Why did the UK govt. grant independence to the BoE in 1997? 12
Why do many developed countries have inflation targeting? 13
What are the recent developments in the Philips curve? 14
Week 2: Readings 15
Bernanke, B. and Mishkin, F. (1997) ‘inflation targeting: a new framework for monetary policy’ in Journal of
Economic Perspectives 11(2) 97-116 15
Week 2: Class questions and answers 16
Topic 2 – Global financial crisis of 2007-09 22
Financial Crises – Causes 22
Interplay between credit boom & speculative house price bubbles 22
Anatomy of an asset price bubble 22
The role of banks – the interplay of credit and asset boom 23
Role for policy 24
Price Stability -Financial Stability model 26
Week 3: Readings 27
Bean, C. (x) The Future of monetary policy – Speech 27
Week 3 – class questions 28
Financial Crises – Consequences 33
What caused the subprime mortgage crisis? 33
Consequences of subprime mortgage crisis on banks 34
Consequences for the real economy 35
How has financial regulation been reformed in the aftermath of the crisis? 36
Week 4 readings 37
The Economists (2013) Calling to Accounts: Making Banks Safe 37
Week 4 class questions 38
Unconventional Tools of Monetary Policy 42
Quantitative Easing 42
Forward guidance 45
Readings 46
The Economists: QE, or not QE?; Quantitative Easing 46
2
,Topic 3 – Exchange rates and currency crises 47
Fixed and Floating exchange rates 47
Week 6 class questions 50
Currency crises 51
Topic 4 – Currency unions 53
Currency unions – Euro VS the dollar 53
What makes a good currency union? 53
Why has the US been a more successful currency union than the Eurozone? 56
What were the causes of the European debt crisis?57
How did it influence the Brexit vote? 58
Topic 5 – Greek debt crisis 60
Topic 6: Growth Policy Error! Bookmark not defined.
All figures Error! Bookmark not defined.
3
, Topic 0: Revision of basic concepts
IS-LM Model
Assumes closed economy.
Helps understand the effects of macroeconomic shocks and how fiscal
monetary policy can stabilise the economy in the face of these shocks
I = investments L = Liquidity
S = savings M = money
= goods market = money market
ð Equilibrium income (Y) ð Equilibrium interest rate (r)
Shows how income, consumption and investment behave after a shock,
moving back to the short-term equilibrium.
The money-market (LM curve) equilibrium requires a situation where money
supply = money demand, where:
Money supply is all money circulating in the economy, which is a fixed amount,
set by the Central Bank (CB).
Money demand is derived from Keynes’ liquidity preference theory, which
theorises the equilibrium between interest rate and the amount of money
demanded:
4
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
√ Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, Bancontact of creditcard voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper mraawolfensberger. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €13,99. Je zit daarna nergens aan vast.
