WiSe 25/26: Monetary Economics: Theory and Empirics
Efrem Castelnuovo
Comments
Aim of the course
This 20-hour course aims to equip students with a solid theoretical foundation in monetary
economics and the empirical tools necessary to bring theory to the data.
The theoretical component builds the core model of monetary policy used by central
banks worldwide: the New Keynesian model of the business cycle. This model serves
as the basis for deriving theoretical predictions regarding the effects of monetary policy
shocks, the role of systematic monetary policy in stabilizing the business cycle, and the
trade-offs such policy entails.
The empirical component focuses on two widely used tools in applied macroeconometrics
for assessing the effects of monetary policy shocks and the role of systematic
monetary policy in mitigating inefficient fluctuations caused by various macroeconomic
shocks. These tools are Vector Autoregressive (VAR) models and Local Projections
(LP).
By the end of the course, students are expected to be able to conduct independent
empirical research using macroeconomic data to analyze the effects of monetary policy
impulses.
Assessment
• Master’s students: Empirical project (10 pages maximum)
• Ph.D. students: Empirical project (10 pages maximum) plus presentation of a scientific paper
7 Class schedule
Regular appointments