ENSAE Paris - École d'ingénieurs pour l'économie, la data science, la finance et l'actuariat

Monetary economics


LOISEL Olivier

Department: Economics


This course studies conventional and unconventional monetary policies in the New Keynesian framework, from the basic New Keynesian model to DSGE models with or without 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
Chapter 6: Other extensions and estimation issues
Part III: Unconventional monetary policy in New Keynesian models
Chapter 7: Forward guidance
Chapter 8: Quantitative vs. credit easing
Chapter 9: Credit policy
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