Department of Economics
ECON 411.3 (02)
Monetary Theory
T2: 2021/22
Course Details
Time:Tuesday and Thursday 13:00-14:20
Location:EDUC 2060
Prerequisites:ECON 214 and a junior course in calculus
Please note: A decent background in math and statistics (as conveyed in ECON 306 and ECON 304) will be an asset.
Course Description:An examination of recent developments in the field of monetary theory. Topics include market-clearing and non-market-clearing models of business cycle fluctuations, rational expectations, the policy ineffectiveness debate, and the time inconsistency of optimal policy.
Website:Some materials will be available on Canvas.
Expected Learning Outcomes
This course introduces various ways of modelling monetary economies. It is designed to prepare students for graduate-level macroeconomics. Upon successful completion, students will have a good knowledge and understanding of the nature and role of money as well as the effects of monetary policy. They will be familiar with a number of important macroeconomic concepts, including dynamic general equilibrium models with infinitely lived households and overlapping generations, rational expectations, the Phillips Curve, and the New Keynesian framework.
Andreas PollakPhone: 966-5221
Arts 812E-mail: (preface subject with "ECON411")
Office Hours:Tuesday and Thursday, 14:30-15:15, or by appointment
There will be biweekly tutorial sessions starting in week 2 or 3 of the term. Further details will be announced at the beginning of the term.
Attendance is optional, but recommended.
In the tutorials, a teaching assistant will discuss assignments, solve problem sets, assist you in practicing for exams and answer your questions.
Assignments will typically be returned during these tutorial sessions, although other arrangements are possible for students not planning to attend.
Course Outline and Readings
Most of the material is covered in:
Champ, Freeman and Haslag: Modeling Monetary Economies, fourth edition. Cambridge: Cambridge University Press, 2016. [referred to as CFH below]
Please note that the second edition of this book, which is almost identical to the current one, is available online through the library at
Where the second-edition chapter numbers are different, they are provided as [CFH2: xx].

Links to the other required readings will be posted on online.

Additional references that are potentially of interest include:
Obstfeld and Rogoff: Foundations of International Macroeconomics, Cambridge, MA: MIT Press, 1996. [OR]
Handa: Monetary Economics, 2nd edition, London: Routledge, 2009. [Handa]
OR will be put on reserve in the library, and the first edition of Handa is available online at

CFH, Chapter 3.1-3.4 [CFH2: 2]
2.Money as a Store of Value
CFH, Chapters 1, 2, 16 and 4 [CFH2: 1, 14, 3]
OR, Chapter 8.2
Handa, Chapters 21, 22.1
3.Money as a Medium of Payment
OR, Chapter 8.3.1-8.3.6
Handa, Chapters 3.3-3.14, 23.1-23.2
4.Money and Other Assets
CFH, Chapters 7, 3.5 and 11 [CFH2: 6, 2, 10]
OR, Chapter 8.7
Handa, Chapter 22.2-22.4
5.The Government and Monetary Policy
CFH, Chapters 15, 17 and 18 [CFH2: 13, 15, 16]
6.Price Surprises
CFH, Chapter 6 [CFH2: 5]
Handa, Chapter 22.5
Wallace, Neil, 1992: “Lucas's signal-extraction model: A finite state exposition with aggregate real shocks,” Journal of Monetary Economics, Elsevier, vol. 30(3), pages 433-447, December.
7.Sticky Prices
Richard Clarida & Jordi Gali & Mark Gertler, 1999: “The Science of Monetary Policy: A New Keynesian Perspective,” Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
Handa, Chapter 15.4
Optional topic:
8.Money and Search
Williamson (1999): "Notes on Macroeconomic Theory", Chapter 8

Required readings for each topic are printed in bold font.
The course outline and reading list are preliminary and may be updated during the term.
There will be three components to your grade:
Midterm ExamMarch 325%
Final ExamTBA60%
The weight of the midterm or assignment component will be shifted to the final if this results in a better overall grade.

Assignments:You will complete a number of assignments (approx. 4 to 5) during the term. If you receive help from any source (book, another person, website) you must acknowledge it on your assignment. Failure to do so may constitute academic misconduct. You will have at least one week to complete each assignment. While you are encouraged to cooperate solving the assignments, I expect the answers that are handed in to reflect students’ individual contributions. Late assignments will not be accepted. Answer keys will be posted online, and the assignments will be discussed in the tutorials.
There will also be a similar number of “problem sets,” which are comprised of practice questions similar to assignments. Just as assignments, the problem sets will be discussed in the tutorials and answer keys will be posted online. Even though they are not handed in and graded, it is recommended that you attempt to solve them before attending the tutorial or reading the answer key.
Exams:There will be an 80-minute midterm exam Exams will be cumulative and test your understanding of the subject material and your ability to analyze and formulate solutions to specific problems. The assignments are intended to assist you in the preparation for the exams, but note that exam questions are typically different from assignment questions. The midterm exam is closed book. Electronic devices will not be permitted during closed-book exams, with the exception of approved non-programmable calculators without communication functions. There will be no deferred midterms.
Missed Components:If assignments or the midterm exam cannot be completed for a justifiable reason, it may be possible to make alternative arrangements prior to the due date at the instructor’s discretion. If no such arrangements are made and the component is missed, a grade of 0 will be assigned, unless the student provides written documentation of circumstances beyond his or her control that prevented him or her from completing the assignment on time. (This documentation typically takes the form of a doctor’s note.)
Attendance:University policies apply. Regular attendance is highly recommended.
Grading System:See for a description of the percentage grading system used in this course.
Grade Distribution:See for the historic grade distribution in this course.
Other Information
Recording of the Course
Students will be allowed to record lectures if they provide a reasonable rationale and if there are no objections by other students.

Course materials are provided to you based on your registration in a class, and anything created by your professors and instructors is their intellectual property and cannot be shared without written permission. If materials are designated as open education resources (with a creative commons license) you can share and/or use in alignment with the CC license. This includes exams, PowerPoint/PDF slides and other course notes. Additionally, other copyright-protected materials created by textbook publishers and authors may be provided to you based on license terms and educational exceptions in the Canadian Copyright Act (see

Before you copy or distribute others’ copyright-protected materials, please ensure that your use of the materials is covered under the University’s Fair Dealing Copyright Guidelines available at For example, posting others’ copyright-protected materials on the open web is not covered under the University’s Fair Dealing Copyright Guidelines, and doing so requires permission from the copyright holder. For more information about copyright, please visit there is information for students available at, or contact the University’s Copyright Coordinator at or 306-966-8817.

Integrity Defined (from the Office of the University Secretary)
The University of Saskatchewan is committed to the highest standards of academic integrity ( Academic misconduct is a serious matter and can result in grade penalties, suspension, and expulsion.

Prepare for Integrity
Students are expected to act with academic integrity.
• Students are encouraged to complete the Academic Integrity Tutorial to understand the fundamental values of academic integrity and how to be a responsible scholar and member of the USask community (tutorial link: .
• Students can access campus resources that support development of study skills, time and stress management, and ethical writing practices important for maintaining academic integrity and avoiding academic misconduct.

Responses to Misconduct
Students are expected to be familiar with the academic misconduct regulations (
• Definitions appear in Section II of the academic misconduct regulations.
• The academic misconduct regulations apply regardless of type of assessment or presence of supervision during assessment completion.
• Students are advised to ask for clarification as to the specific expectations and rules for assessments in all of their courses.
• Students are urged to avoid any behaviour that could result in suspicions of cheating, plagiarism, misrepresentation of facts. Students should note that posting copyrighted course materials (e.g., notes, questions, assignments or exams) to third party websites or services or other forum or media without permission is an academic or non-academic misconduct offense.
Non-academic offenses are dealt with under the Standard of Student Conduct in NonAcademic Matters and Regulations and Procedures for Resolution of Complaints and Appeals.

Examinations with Access and Equity Services (AES)
Students who have disabilities (learning, medical, physical, or mental health) are strongly encouraged to register with Access and Equity Services (AES) if they have not already done so. Students who suspect they may have disabilities should contact AES for advice and referrals at any time. Those students who are registered with AES with mental health disabilities and who anticipate that they may have responses to certain course materials or topics, should discuss course content with their instructors prior to course add / drop dates. In order to access AES programs and supports, students must follow AES policy and procedures. For more information or advice, visit, or contact AES at 306-966-7273 or

Students registered with AES may request alternative arrangements for mid-term and final examinations. Students must arrange such accommodations through AES by the stated deadlines. Instructors shall provide the examinations for students who are being accommodated by the deadlines established by AES.

For information on AES services for Fall 2021 please visit:

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