Time: November 7 (Thursday), 11:30 - 13:00
Location: Aula (The Campus, University of Vienna)
Monetary Policy: Theory and Practice
Prof. Volker Wieland, Ph.D. (Professor for Monetary Economics, Goethe-University Frankfurt)
This course is open to all Master and doctoral students. The schedule has been revised as of October 2. The new dates for lectures and meetings at the University of Vienna are: November 4 to 8 and December 2 to 6.
Information in the course directory (u:find)
The course is open to students taking it for credit and to students just auditing. Students taking the course for credit are expected to turn in one take-home problem set by December 15 or give a 25-minute presentation on a selected research article from the related literature.
Students interested in the course should register for it, send an e-mail to the professor at wieland@imfs-frankfurt.de and come to the first class on Monday, Nov 4, 2024 from 14:00 to 15:30 in the OMDS Seminar Room, 03.307. If you cannot attend the first class but plan to take the course, please inform the professor via e-mail at the above e-mail address.
- Course Introduction
The objective of this course is to provide an introduction to the analysis of monetary policy making with practical applications to current policy challenges. Examples from the European Union, the United States and Japan will be discussed. We will develop theoretical models of monetary policy and learn how different policy recommendations can be evaluated using these models. We will also explore the interaction with fiscal and macroprudential policies.
Students will learn how to conduct practical simulation exercises and make use of software tools for model analysis. In particular, we will analyse policy working with macro-financial models available in the Macroeconomic Model Database (see www.macromodelbase.com). Furthermore, we will draw on the Epi-Macro- Model Database (see www.epi-mmb.com).
The following lists summarize the main topics of the lectures and the relevant background readings. Further details regarding the schedule, slides and handouts are provided ahead of the class meetings on Moodle. If you do not have access to Moodle, send an e-mail to the professor at the above address to obtain the material.
- Outline
1. Macroeconomic fluctuations and policy responses 2000–23: A brief tour
2. The inflation surge of 2021-23 and the Taylor principle
3. Monetary policy rules and model uncertainty
4. Inflation targeting and optimal control
5. Optimal policy in a New Keynesian model
6. The effective lower bound on nominal rates: From QE to QT
7. Monetary-fiscal interactions, fiscal stimulus and consolidation
8. The financial accelerator, housing, monetary and macroprudential policy
- Background Readings
Book Chapters:
Cochrane, J.H., J. B. Taylor and V. Wieland, Evaluating Rules in the Fed's Report and Measuring Discretion, in: John H. Cochrane and John B. Taylor (eds.), Strategies for Monetary Policy, Hoover Institution Press, May 2020.
Reis, R. (2022), "The burst of high inflation in 2021/22: How and why did we get here?" and Wieland V. (2022) Discussion, in Bordo, Cochrane, Taylor (2022), "How monetary policy got the behind the curve – and how to get back", pp. 203-250.
Schmidt, S. and Wieland, V. (2013), “The New Keynesian Approach to Dynamic General Equilibrium Modeling: Models, Methods and Macroeconomic Policy Evaluation”, Handbook of Computable General Equilibrium Modeling, Vol. 1B, Elsevier.
Walsh, C. (2017). Monetary Theory and Policy, MIT Press, 4th edition, New Keynesian Monetary Economics.
Wieland, V., Afanasyeva, E., Kuete, M. and Yoo, J. (2016), “New Methods for Macro-Financial Model Comparison and Policy Analysis,” in John B. Taylor and Harald Uhlig (eds.), Handbook of Macroeconomics: Vol 2, North Holland/Elsevier, 2016.
Wieland, V. and Wolters, M. (2013), “Forecasting and Policy Making”, in, Elliott, G. and A. Timmermann (eds.), Handbook of Economic Forecasting, Vol. 2, Elsevier.
Journal Articles and Working Papers:
Adrian, T., C. Erceg, M. Kolasa, J. Linde, R. McLeod, R. Veyrune and P. Zabczyk, (2024), New Perspectives on Quantitative Easing and Central Bank Capital Policies, IMF Working Paper, WP 24/103, May 2024.
Beck, G. and Wieland V. (2008), “Central Bank Misperceptions and the Role of Money in Interest Rate Rules”, Journal of Monetary Economics, 55 (S1), p. S1-S17, October.
Beyer, R. and V. Wieland (2019), “Instability, Imprecision and Inconsistent use of Equilibrium Real Interest Rate Estimates” Journal of International Money and Finance, 2019, 94, pp. 1-14.
Clarida, R., Gali, J. and Gertler, M. (1999). "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, 37(4), p. 1661-1707, December.
Cogan, J.F., Taylor, J.B., Wieland, V. and Wolters, M. (2013), “Fiscal Consolidation Strategy”, Journal of Economic Dynamics and Control, 37, p. 404 – 421, February.
Coenen, G., Orphanides, A. and Wieland, V. (2004), “Price Stability and Monetary Policy Effectiveness when Nominal Interest Rates are Bounded at Zero”, Advances in Macroeconomics, 4(1), Art. 1, January.
Cogan, J., Cwik, T., Taylor, J.B. and Wieland, V. (2010), “New Keynesian versus Old Keynesian Government Spending Multipliers”, Journal of Economic Dynamics and Control”, 34(3), p. 281-295, March.
Eichenbaum, M.S., Rebelo, S. and Trabandt, M., (2022), „Epidemics in the New Keynesian Model,“ Journal of Economic Dynamics and Control, Volume 140, July 2022.
Feld, L. and V. Wieland, (2020), “The German Federal Constitutional Court Ruling and the European Central Bank Strategy”, Journal of Financial Regulation, Volume 7, Issue 2, October 2021, Pages 217–253.
Grimm, V., L. Nöh, and V. Wieland (2023), “Government bond rates and interest expenditure of large euro area member states: A scenario analysis”, International Finance, July 2023.
Kuester, K. and Wieland, V. (2010), “Insurance Policies for Monetary Policy in the Euro Area”, Journal of the European Economic Association, 8(4), p. 872-912.
Orphanides, A. and Wieland, V. (2013), “Complexity and Monetary Policy”, International Journal of Central Banking”, 9(S1), p. 167-204, January.
Orphanides, A. and Wieland, V. (2000), “Efficient Monetary Policy Design Near Price Stability”, Journal of the Japanese and International Economies, 14, p. 327-365.
Svensson, L. (1997), ”Inflation Forecast Targeting: Implementing and Moni-toring Inflation Targets”, European Economic Review, 41, p. 1111-1146.
Tatar, B. and V. Wieland (2024a), Taylor Rules and the Inflation Surge: The Case of the Fed, CEPR Discussion Paper 18910, March 2024.
Tatar, B. and V. Wieland (2024b), Policy Rules and the Inflation Surge: The Case of the ECB, CEPR Discussion Paper 19521, September 2024.
Taylor, J.B. and Wieland, V. (2012), “Surprising Comparative Properties of Monetary Models: Results from a New Monetary Model Base”, Review of Economics and Statistics, 94, p. 800-816.
Woodford, Michael (2010), “Simple Analytics of the Government Spending Multiplier”, American Economic Journal: Macroeconomics, American Economic Association, 3(1), p. 1-35, January.
Wieland, V., Cwik, T., Mueller, G., Schmidt, S. and Wolters, M. (2012), “A New Comparative Approach to Macroeconomic Modelling and Policy Analysis”, Journal of Economic Behavior and Organisation, 83, p. 523-541, August.
Wieland, V. (2020), “The Decline in Euro Area Inflation and the Choice of Policy Strategy,” Sintra Conference 2020, European Central Bank, working paper, December 2020.
Wieland, V. (2023), Discussion of "policy packages and policy space: Lessons from COVID-19" by Bergant and Forbes, European Economic Review, Vol. 158, September 2023.
