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Monetary economics

Code: 61538
ECTS: 2.5
Lecturers in charge: izv. prof. dr. sc. Boris Vujčić - Lectures
English level:


All teaching activities will be held in Croatian. However, foreign students in mixed groups will have the opportunity to attend additional office hours with the lecturer and teaching assistants in English to help master the course materials. Additionally, the lecturer will refer foreign students to the corresponding literature in English, as well as give them the possibility of taking the associated exams in English.

1. komponenta

Lecture typeTotal
Lectures 30
* Load is given in academic hour (1 academic hour = 45 minutes)
COURSE AIMS AND OBJECTIVES: Course is based on and represents an extension of Macroeconomics course. Monetary economics establishes relations between real variables (production, employment, real interest rates) and nominal variables (nominal interest rates, money supply, inflation rate). In addition to the basic analysis of money supply and demand mechanisms and monetary policy objectives and conduct, this course puts special emphasis on the functioning of the foreign exchange market. Due to high level of currency substitution exchange rate mechanism is by far the most important transmission channel of the monetary policy in Croatia. Therefore, we study in more detail that market and that particular transmission mechanism.

1. Introduction to monetary economics (various definitions of money, use of money, measuring the money supply, price of money - interest rate, exchange rate...)
2. Law of one price (purchasing power parity, exchange rate deviations)
3. Law of one price in financial markets (uncovered and covered interest rate parity)
4. Money market, interest rate determination
5. Macro and micro structure of foreign exchange market
6. Banking market and non-bank financial intermediators
7. Bond market
8. Inflation (definition, measurement, costs of inflation)
9. Monetary policy (monetary policy goals, instruments, policies)
10. Exchange rate regimes and monetary policy
11. Monetary policy in the European Monetary Union (EMU, Euro, E(S)CB, transmission mechanisms, policy instruments and developments)
12. Monetary policy in Croatia - case study
  1. F. S. Mishkin: The Economics of Money, Banking and Financial Markets, 6th edition
  2. L. S. Copeland: Exchange Rates and International Finance
  3. M. Blejer, M. Škreb (editors): Central Banking and Monetary Policy: Major Issues and Implications for Transition Economies
  4. S. Ghatak: Monetary Economics in Developing Countries
  5. L. Mahadeva, G. Sterne (editors): Monetary Policy Frameworks in a Global Context
  6. B. Vujčić (urednik): EURO - Europska monetarna unija i Hrvatska
  7. B. Vujčić: Monetarna politika i gospodarski rast
  8. C. E. Walsh: Monetary Theory and Policy
Prerequisit for:
Enrollment :
Passed : Macroeconomics 2
Passed : Microeconomics 2
3. semester
Mandatory course - Regular study - Financial and Business Mathematics
Consultations schedule: