Seminar on Monetary Theory (2024/25)

Three competing theories of money tested against six historical episodes.

Syllabus: Download PDF

Course Structure

The seminar is organised around three student teams of four members each. Every team presents one theory — Quantity Theory, FTPL, or MMT — and subsequently analyses each historical episode through the lens of their assigned theory. At the end of the course, each student writes a short essay summarising their theory and assessing its empirical fit.

Prerequisites: Basic knowledge of macroeconomics.

Part 1 — A Brief History of Money

What is money, what has it been, and why does (and did) it have value?

Part 2 — Three Theories of Money

• Quantity Theory of Money — money supply, velocity, and the price level
• Fiscal Theory of the Price Level (FTPL) — government budget constraints and inflation determination
• Modern Monetary Theory (MMT) — sovereign currency issuance and fiscal space

Part 3 — Money, Inflation, and History

Each episode is analysed by all three teams, who explain the data through the lens of their theory.

• Episode 1: Hyperinflation in Germany in the 1920s
• Episode 2: Deflation and the Great Depression
• Episode 3: The Great Inflation of the 1970s
• Episode 4: Financial crisis and the zero lower bound
• Episode 5: Covid-19 pandemic
• Episode 6: The 2022 inflation surge