This advanced course will build a foundation for understanding liquidity policy implementation in the Asia-Pacific using standard economic models. The course will discuss the effects of high level discussion of a key element of national level public policy, monetary policy.
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The Asia-Pacific region contains some of world’s most dynamic economies. Economies around the globe rely on credible monetary policy implemented by central banking institutions. Monetary policy governs the liquidity available to the payment systems that underlie trade and finance. Smooth adjustment of liquidity can minimize instability in money and foreign exchange markets and keep inflation and growth on a secure footing. The industrial giants of China, Japan, and Korea; the Southeast Asian emerging markets of Indonesia, Malaysia, Philippines, and Thailand; and the international entrepots at Hong Kong and Singapore each face unique challenges in implementing liquidity policy.
Modern monetary policy connects macroeconomic conditions and key financial market indicators. It will also analyze the way that central bank goals for macroeconomic stability will determine outcomes in interest rates and exchange rates. The rigorous theoretical foundation should also build analytical skills that might be applied to policy and market analysis in a broad range of economies and even in the Asia-Pacific region as policy-making evolves in the future.
The topics covered each week:
Module 1 - Monetary Policy Implementation
Module 2 - Monetary Policy Strategy
Module 3 - Exchange Rates and Monetary Policy
After taking this course and going through the interactive activities, you will be able to:
(1) Describe Monetary Policy instruments central banks use
(2) Interpret on-going actions of central banks
(3) Apply graphical analysis and calculate basic economic measures used as tools by central banks or analysts
(4) Analyze the way that central bank goals for macroeconomic stability will determine outcomes in interest rates and exchange rates
Syllabus
WEEK 1
Monetary Policy Implementation
Welcome to the first module! This module will focus on the microeconomics of monetary policy implementation. We study how the central bank balances supply against demand in liquidity markets to target the key interest rate on interbank lending and influence money markets.
WEEK 2
Monetary Policy Strategy
Welcome to Module 2! This module will focus on the macroeconomics of monetary policy strategy. We study the how (and why!) the central bank sets monetary policy in response to business cycle conditions in order to achieve a smooth and predictable inflation target.
WEEK 3
Monetary Policy and Exchange Rates
This module will focus on the various interactions between monetary policy and exchange rates. We study how monetary policy affects the balance of supply and demand in foreign exchange markets and policies required to stabilize the relative value of domestic currency
WEEK 4
Bringing it all together
Welcome to the final exam module! This module discusses regional approaches to exchange rate stabilization in Singapore and China. This supplementary material should help you tie together the application of concepts from the previous modules. However, only materials from Modules 1-3 will be directly covered in the final exam.
