The Monetary Analysis and Prognosis

  • Credits: 6
  • Ending: Examination
  • Range: 2P + 2C
  • Semester: summer
  • Year: 1
  • Faculty of Economics and Finance

Teachers

Included in study programs

Financial Markets and Investing

Teaching results

a) to understand theoretical background and importance of monetary analysis and prognosis in the practice of central banks
b) to give more details about the tools and techniques used in the monetary analysis and prognosis in EU and USA
c) to demonstrate the ability to utilize analytical and quantitative methods (statistical, econometric) in monetary analysis and prognosis
d) to integrate theory and practice to demonstrate creativity in problem solution
e) to develop students as researchers, critical thinkers and professionals
f) to demonstrate the ability to use the Gretl for analytical and forecasting purposes
Knowledge and understanding:
a) to apply thorough and sectoral knowledge from monetary analysis and prognosis in creating of recommendations for banks, households and nonfinancial institutions
b) to use in practice sophisticated methods and procedures of monetary analysis and prognosis (statistical, econometric, modeling)
c) to utilize obtained knowledge in solving key research issues in this area
d) to demonstrate an ability to collect and to analyze data and information from various specializations and synergistically construct results of own observation.
Practical skills and competences:
a) to demonstrate an ability to work in team
b) to select and to use appropriate techniques and research methods
c) to be able to collect, to select and to analyze data
d) to take critical stance towards own results as well as to the results of other researchers or clients
e) to formulate understandable and compelling presentations of own results in written and oral forms
f) to demonstrate creativity and intellectual curiosity in this specialization and to utilize them in following research
g) to use obtained skills in work with softwares.

Indicative content

1. The role of monetary analysis in macroeconomic stabilization – position, goals, types, tools and importance
2. Modeling of analytical and forecasting approaches in monetary policy. Econometric models used in monetary analysis in EU and USA.
3. Analysis of money balance – factor analysis, sector analysis – Flow of funds, Holtropp method of analysis, Analysis of banking sector liquidity
4. Analysis of interconnection between integrated economic and financial accounts by institutional sectors and balance of payment with effect to price and financial stability
5. Analysis of present transmission mechanisms of monetary policy – strategies of selection monetary goals and tools, possibilities of central bank to influence money circulation in sense of used transmission mechanisms
6. Reform of monetary policy strategy as a modern challenge for central banks. Analysis of interest rate and foreign exchange pass-through in monetary policy. The possibilities to improve the framework of monetary policy moving from targeting quantities to short-term policy rates
7. Analysis of money stock – multipliers and income velocity of money, basic analysis of money stock, monetary survey, analysis of monetary tools effectiveness
8. Changes in central bank balance sheet – changes on asset and liability sides, interconnections between monetary base and money stock through the changes in balance sheet.
9. Complex analysis of money stock – analysis of reserve impact on process of deposit multiplication in banking system. Forecasting of C/D and T/D. Analysis of monetary base. Factors affecting monetary base and money stock. Sources and usage of monetary base.
10. Liquidity management of banking sector – systemic approach to liquidity management, effects of interbank money market operations on monetary tools selection with refinancing and sterilising impact on money stock, liquidity table.
11. Inflation targeting – analysis of inflation in relation to money stock and money demand. New consensus of monetary policy. Inflation targeting in classic model of International Monetary Fund. The importance of forward looking monetary policy. The role of inflation forecast.
12. Monetary criteria of public debt. Strategy of costs covering of debt service. Debt parameter. Management of public debt ex ante and ex post from monetary policy point of view. Relationship between monetary and fiscal policy. Risks of fiscal dominance.
13. Effects of conventional and unconventional monetary policy on price and financial stability in Euro Area, USA, United Kingdom and in Japan. Central bank digital currency – challenges and threats.

Support literature

1. Kotlebová, J. – Sobek, O. (2007) ) Menová politika – stratégie, inštitúcie a nástroje. Bratislava: Iura Edition 2007, ISBN 978-80-8078-092-0
2. Revenda, Z. (2011) Centrální bankovníctví. Management Press 2011, ISBN 978-80-7261-230-7
3. Revenda, Z. a kol. (2014) Peňežní ekonomie a bankovníctví. Management Press 2014, ISBN 978-80-7261-279-6
4. Kodera, J. (2007) Měnová analýza. ASPI: Praha 2007, ISBN978-80-7357-298-3
5. Tobias, A. et al (2018). Advancing the Frontiers of Monetary Policy, IMF 2018, ISBN 978-14-8432-594-0
6. Berg, Andrew, Philippe D. Karam, and Douglas Laxton, 2006, “Practical Model-Based Monetary Policy Analysis—A How-To Guide,” IMF Working Paper 06/81
7. Bordo, M. D. and Levin, A. T. (2017). Central Bank Digital Currency and the Future of Monetary Policy. National Bureau of Economic Research. NBER Working Paper 23711
8. Mishkin, F. S. (2012) The Economics of Money, Banking, and Financial Markets. Scott, Foresman and Company 2012, ISBN 978-01-3277-024-8
9. Walsh, C. E. (2010) Monetary Theory and Policy. Massachusetts Insitute of Technology 2010, ISBN 978-02-6223-231-6
10. Champ, B. – Freeman, S. – Haslag, J. (2011 ) Modeling Monetary Economics. 3rd edition, Cambridge University Press 2011, ISBN 978-05-2117-700-9
11. Wray, L. R. (2012) Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. 2012, ISBN 978-02-3036-889-7
12. Brook, Ch. (2014). Introductory Economics for Finance. 3rd Edition, Cambridge University Press
13. Set of scientific papers related to the lecture topics provided continuously to students

Requirements to complete the course

30% seminars (input 3%, essay 12%, midterm 15%)
70% written exam

Student workload

- lectures 26 hours
- seminars 26 hours
- preparation of input 7 hours
- preparation of essay 20 hours
- preparation for midterm 25 hours
- preparation for written exam 52 hours

Date of approval: 09.02.2023

Date of the latest change: 29.12.2021