FN 5083/6083: MONETARY ECONOMICS
INCEIF
The Global University of Islamic Finance
COURSE OUTLINE
FN 5083/6083: MONETARY ECONOMICS
COURSE TITLE
COURSE CODE
CREDIT HOURS
METHOD OF DELIVERY
MONETARY ECONOMICS
FN5083/6083
3 hrs
Full-Time: Face-to-face
ASSESSMENT METHOD
Assignment:
Term Paper:
Mid-Term
Final Exam:
10%
20%
20%
50%
INSTRUCTOR
Mansor H. Ibrahim (Ph.D.)
COURSE SYNOPSIS
The course introduces to modern theories of monetary economics
with the attempt to look at them from the Islamic perspectives. In
the course, the macroeconomic implications of money markets
and monetary policies will be discussed in details. The course
introduces students first with the macroeconomic model of
monetary economics using the IS-LM-AS framework. Then, a
detailed discussion of money, money demand, money supply
process and monetary policy making will be dealt with. Various
contemporaneous issues in monetary economics will also be
touched. These include the issues of monetary credibility,
monetary policy and exchange rate regimes and others.
The course aims at:
1. Familiarizing students with modern monetary economics
theories for understanding the working of money markets
and monetary policy and their impacts on macroeconomic
performance.
2. Exposing students to contemporary issues in monetary
economics.
3. Discussing the monetary issues from Islamic perspectives
COURSE OBJECTIVES
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FN 5083/6083: MONETARY ECONOMICS
LEARNING
OUTCOMES
At the end of the course, students will be able to :
1. appraise the monetary theories to contemporary monetary
issues
2. criticize the issues involved in developing a modern,
effective framework for conducting monetary policy
3. explain monetary theories in details
4. Evaluate and frame existing monetary theories in the
context of Islamic banking and finance.
READING LIST
There is no specific textbook for the course. Students will be provided
with the reading materials from various sources including journal articles.
Text:
Mishkin, F. S. (2010), Economics of Money, Banking and Financial
Markets, 9th ed. Prentice Hall.
Additional Required Readings:
Bordo (1992), The Classical Gold Standard
Chapter 1: The Nature of Money (online resource)
Chapter 2: The Demand for Money (online resource)
Chapter 3: The Supply of Money (online resource)
Forssbaeck, J. and Oxelheim, L. (2006), On the Link between Exchange
Rate Regimes, Capital Controls and Monetary Policy Autonomy
In Small European Countries 1979-2000, World Economy, 341-368.
Marcucci, J. and Quagliariello, M. (2008), Is bank portfolio riskiness
Procyclical? Evidence from Italy using a vector sutoregression.
Journal of International Financial Markets, Institutions and
Money, 18, 46-63.
McCallum, B. T. (1989), Monetary Economics: Theory and Policy,
Chapter 5: The Static Classical and Keynesian Models, New York:
McMillan.
Neely C. J. and Wood, G. E. (1995), Deflation and Real Economic
Activity under the Gold Standard, Review, 27-37.
Shefrin, S. M. (1989), The Making of Economic Policy, Chapter 6:
Strategic Models of Policymaking, Blackwell.
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FN 5083/6083: MONETARY ECONOMICS
Wallace, N. and Sargent, T. J. (1976), Rational Expectations and the
Theory of Monetary Policy, Journal of Monetary Economics,
2: 169-183.
As references, the following books can be used:
1. Handa, J. (2008). Monetary Economics. London: Routledge.
2. Mishkin, F. S. (2009). Monetary Policy Strategy. New York:
Wiley.
COURSE OUTLINE
Topics
References
Week # 1
Introduction to Monetary Economics
Handout
 Brief Evolution of Macroeconomic Ideas and
the Roles of Money
 Money in Macroeconomic Framework
 Topics and Issues in Monetary Economics
Week # 2
Concepts of Money
 Definition and Function
 Measurement: Simple versus Divisia
 The Concept of Money in Islam
Mishkin (2010)
Chapter 3
Money Demand Functions
 Why Money Demand?
 Theories of Money Demand
 Determinants of Money Demand
 Issues
Mishkin (2010)
Chapter 19
Money Supply Process
 Money Multiplier
 Economic Agents in the Money Supply
Process
 Money Market and the propagation of Shocks
Mishkin (2010)
Chapter 14
Week # 3, 4
Week # 4, 5
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Chapter 1: the
nature of money
Chapter 2: The
Demand
for
Money
Chapter 3: the
Supply of Money
FN 5083/6083: MONETARY ECONOMICS
Weeks # 6, 7
Money in IS-LM-AS framework
 Aggregate Expenditure and IS function
 Money Market and LM function
 Factor Market and AS curve
 Mathematical Exposition
Week # 8
Mid-Semester Examination
Week # 9
Issue # 1: Monetary Transmission Mechanism
McCallum
(1989)
Chapter 5
Mishkin (2010)
Chapters 20, 21,
22
Mishkin (2010)
Chapter 23
Week # 10
Issue # 2:
Expectations
Monetary
Policy
and
Rational Mishkin (2010)
Chapter 25
Sargent
and
Wallace (1976)
Week # 11
Issue # 3: Exchange Rate Regimes, Capital Mobility Mishkin (2010)
and Monetary Policy Autonomy
Chapters 17, 18
Forssbaek
and
Oxelheim (2006)
Week # 12
Issue # 4: Monetary Policy Making and Credibility
Sheffrin, S. M.
(1989), Chapter 6
Week # 13
Issue # 5: Monetary Policy and Boom/Bust Cycles
Marcucci
and
Quagliariello
(2008)
Week # 14
Issue # 6: Monetary Standards – Fiat versus Bordo (1992)
Commodity-backed Money
Neely and Wood
(1995)
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