Download university of zimbabwe - Midlands State University

MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE
DEPARTMENT OF ECONOMICS
MONETARY ECONOMICS COURSEWORK OUTLINE 2010
LECTURER: Mr. R MANDISHEKWA.
COURSE OBJECTIVES
This course is intended to enhance students’ knowledge in the field of Monetary
Economics. The course covers among other things the basic concepts of money, the link
between money and other economic variables, the concepts of money demand and money
supply, the role of financial institutions in economic growth and development and the
international dimensions of money.
A detailed but by no means exhaustive reading list for course topics will be given.
Students are expected to refer to other relevant references available in the Library and
the Internet. There will be two lectures and one tutorial per week.
The course assessment will be as follows:
 Course-work (which may include assignments, test and/or a research project) will
count for 30%.
 Final Examination, which will constitute the remaining 70%.
NB. Students who do not have course work will not be allowed to sit for the final
examination
Duration of the Course: One Semester
COURSE TOPICS
1.
The Concept of Money
Evolution of money and the functions of money
The definition and measurement of money
The role of money in economic activities
Review the different schools of thought on this issue
Empirical Evidence and Relevance to LDCs
2.
The Demand for Money
The traditional approach
Empirical problems with the traditional approach
Buffer stock monetarism and financial innovations approaches
Empirical evidence and relevance to LDCs
3.
Money Supply Theory
Money multiplier approach
Credit counterpart approach (portfolio approach)
Empirical evidence and relevance to LCDs
4.
Financial Intermediation, Economic Growth and Development
The role of financial intermediaries
The link between financial sector development and economic growth
Causality between financial sector development and economic development,
financial repression.
Review the theory and experience of financial sector reforms in developing countries
including Zimbabwe.
5.
Financial and Monetary Institutions in Zimbabwe
The role of the Central Bank (RBZ)
The structure and functions of financial institutions
The level of development of Zimbabwe’s financial sector (i.e financial depth, assets
and liability growth and contribution to economic development)
6.
Interest Rates
Nominal interest rates
Real interest rates
Determination of interest rates (Liquidity Preference Theory and Loanable Funds
Theory)
Theories of Term Structure
7.
Monetary Policy and the control of inflation
The goals and targets of monetary policy
Techniques of monetary control
The efficiency of monetary control
Monetary policy measures in Zimbabwe
Open economy monetary policy.
8.
Money in the International Setting
An overview of the international monetary system
Emerging international financial markets
Regional financial/monetary integration
International Financial Liberalization
Reading List
Balino. T. J and C. Cottarelli (ed) (1994) Frameworks for Monetary
Stability: Policy Issues and Experience International Monetary Fund
1.
2.
3.
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Fry M.J. (1997) Emancipating the Banking System and
Developing Markets for Government Debt Routledge
Fry M. J. (1995) Money, Interest, and Banking in Economic
Development John Hopkins
Ghatak S. (1981) Monetary Economics in Developing Countries
The Macmillan Press Ltd
Greenwood and Smith, (1997) “Financial Markets in Development
and
Development of Financial Markets” Journal of Economic
Dynamics and Control, Vol. 21, pp. 145-181
Hendry D. (1995) Dynamic Econometrics (chap 16.1 – 16.4 on Money
Demand) Oxford university press
6 Jenkins C. (1999) “Money Demand and Stabilization in Zimbabwe”
Journal of African Economies, Vol. 7, No. 1, pp. 34-61
Levine R. (1997) “Financial Development and Economic Growth:
Views and Agenda” Journal of Economic Literature, Vol 35, pp.
1445-1465
7 Lewi M., and P.D. Mizen (2000) Monetary Economics Oxford
University Press (Main Library-Reserve)
Lucket D.G. (1984) Money and Banking (3rd edition) McGraw Hill
8 Mayer T. Duesenberry and R.Z. Aliber (1993) Money, Banking and
the Economy (5th edition) Norton
9 Ronald McKinnon (1973) Money and Capital in Economic
Development and Brookings Institution.
10 World Bank (1989) World Bank Report (papers on financial
repression and liberalization) Oxford Economic Press
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