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Advanced Monetary Theory and Policy: New Keynesian Economics, DSGE Models, and Central Banking

Author

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  • ZENAGUI, Sid Ahmed

Abstract

Advanced Monetary Theory and Policy: New Keynesian Economics, DSGE Models, and Central Banking provides a graduate-level treatment of modern monetary economics, integrating theoretical rigor, quantitative methods, and contemporary policy applications. The textbook develops the foundations of monetary theory, including money demand, intertemporal optimization, money-in-utility models, cash-in-advance frameworks, search-theoretic monetary models, and overlapping generations models. It systematically advances toward New Keynesian economics and Dynamic Stochastic General Equilibrium (DSGE) modelling, covering price and wage rigidities, inflation dynamics, Bayesian estimation, and open-economy extensions. The volume further examines monetary policy design, inflation targeting, optimal policy under commitment and discretion, central bank credibility, forward guidance, and macroprudential considerations. Emerging research frontiers—including heterogeneous-agent models, climate-related monetary risks, central bank digital currencies, artificial intelligence in central banking, geopolitical shocks, and nonlinear DSGE methods—are incorporated to reflect developments through 2026. Emphasis is placed on mathematical derivation, empirical evidence, computational implementation using Dynare, MATLAB, Python, Julia, and R, and research-oriented exercises suitable for graduate students, researchers, and policy practitioners. The textbook aims to bridge advanced monetary theory with practical policy analysis in both advanced and emerging economies.

Suggested Citation

  • ZENAGUI, Sid Ahmed, 2026. "Advanced Monetary Theory and Policy: New Keynesian Economics, DSGE Models, and Central Banking," MPRA Paper 129218, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:129218
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    File URL: https://mpra.ub.uni-muenchen.de/129218/1/MPRA_paper_129218.pdf
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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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