Monetary Policy

Course content

The aim of this macroeconomic course is to offer an understanding of several aspects of money and the macro economy, thereby providing insights into how and why monetary phenomena and monetary policy affect important macroeconomic aggregates such as output, consumption, inflation and unemployment. Moreover, focus will be on the characteristics of “good” monetary policymaking in the sense of assessing the advantages and disadvantages of various monetary policy strategies.


To secure a firm foundation for the aspects covered, emphasis will be on rigorously formulated theoretical models. Economic intuition, however, is just as important as mathematical formalism. The curriculum will be mainly theoretical, but the empirical relevance and motivation of the material will be important.


MSc programme in Economics – elective course


Note: The course is NO LONGER a part of the Financial line at the MSc programme in Economics, why the course do not have a F-mark any more.

Spring 2020: It has now been confirmed from the Head of the Department and the Head of Study, that the course is expected to be offered in the spring 2020.


The PhD Programme in Economics at the Department of Economics - elective course with resarch module (PhD students must contact the study administration and the lecturer in order to write the research assignment)


The course is a part of the admission requirements for the 5+3 PhD Programme in Economics. Please consult the 5+3 PhD admission requirements.


Learning outcome

After completing the course the student is expected to be able to:



  • Account for the theories and applications covered in the course in both a formal and intuitive fashion.



  • Master the concepts, methods, tools and models learned during the course
  • Analyze and assess monetary policy and monetary phenomena from a theoretical as well as an empirical point of view



  • Apply the acquired knowledge and skills independently and analyze real-life occurrences pertaining to monetary policy issues in later employment in either public or private institutions.
  • Be responsible for analyzing advanced subjects within monetary policy and related disciplines.



Mostly lectures (where students should ask questions). Some lectures, however, will be substituted with run-through of relevant exercises

Due to a change of lecturers the literatur has January 15th, 2020, been changed to:

The curriculum will consist of a large part of J. Galí (2015): “Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications” - Second Edition, and some articles.


The curriculum will consist of a large part of Carl. E. Walsh (2017): “Monetary Theory and Policy”. Fourth Edition, The MIT Press, and a number of articles.

As some of the material requires a thorough understanding of macroeconomic general equilibrium models, it is a prerequisite to master economic theory at a level corresponding to David Romer: Advanced Macroeconomics, McGraw-Hill (equivalent to material currently used in Macroeconomics III at the tudy of Economics, University of Copenhagen). In particular, material on the Ramsey model must be well known. One should therefore be familiar with basic intertemporal optimization, and analyses of static and dynamic systems with rational expectations. In short: Having taken Macroecomics III is highly recommended, if not necessary.

One should not be afraid of mathematical rigor. It serves to foster conclusions and policy implications that are internally consistent, informed by data, and not merely based on “common sense” and/or personal judgements and political opinions. Mathematics is just a tool, but a very helpful one in economic science, for structuring thoughts and discussions. However, never forget: Economics is the central matter.

Since registration for courses involves a level of commitment, it is important to know what you sign up to follow. In that respect, you are lucky with this course. Websites from previous versions of the course (with full access to slides, exercises, notes, etc.) are public. The 2018 version of the course is here:
So you will be able to see hands on what you sign up for.

2 hours lectures 1 to 2 times a week from week 6 to 20 (except holidays).

The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"

Timetable and venue:
To see the time and location of lectures please press the link under "Se skema" (See schedule) at the right side of this page (F means Spring).

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E19; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Forår/Spring – Weeks 5-30”
Press: “ View Timetable”

7,5 ECTS
Type of assessment
Written assignment, 3 hours
The exam assignment is given in English and must be answered in English.

The Board of Study has decided to change the exam to an online take-home exam, due to the Corona-crisis. The exam is still individual and you may not communicate with others about the exam assignment or solutions in any circumstances.

With aids


Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.


To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.


In order to pass the exam (the grade 02) in this course, the student must meet the requirements, as laid out in the learning outcome, to a minimally acceptable degree.

Single subject courses (day)

  • Category
  • Hours
  • Exam
  • 3
  • Preparation
  • 161
  • Lectures
  • 42
  • English
  • 206