Monetary economics


This course studies conventional and unconventional monetary policies in the New Keynesian framework, from the basic New Keynesian model to extended New Keynesian models (with sticky wages, small open economies, or financial frictions). It derives the main implications of these models for optimal monetary policy in normal times and in crisis times, highlighting in particular the importance of private agents’ expectations in the transmission and the conduct of monetary policy, and providing illustrations taken from the practice of various central banks.


General introduction

Part I: Conventional monetary policy in the basic New Keynesian model
Chapter 1: The basic New Keynesian model
Chapter 2: Optimal monetary policy
Chapter 3: Monetary-policy design

Part II: Conventional monetary policy in extended New Keynesian models
Chapter 4: The sticky-wages extension
Chapter 5: The small-open-economy extension

Part III: Unconventional monetary policy in New Keynesian models
Chapter 6: Forward guidance
Chapter 7: Quantitative vs. credit easing

General conclusion


  • Galí, J., 2015, “Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework and its Applications,” Princeton University Press
  • Woodford, M., 2003, “Interest and Prices: Foundations of a Theory of Monetary Policy,” Princeton University Press