It covers recent research in monetary theory. It incorporates models that have been used to explore a wide variety of interesting theoretical and policy questions and have motivated new empirical work that has contributed to our knowledge of macroeconomic and monetary phenomena. Monetary issues such as optimal policy, the role of policy instrument rules, policy and macroeconomic stability, and discretion versus commitment are just some of the topics on which interesting new insights have been gained. In addition to the work on what are generally referred to as new Keynesian models, this course includes discussion of such topics as the fiscal theory of the price level, inflation targeting, Taylor rules, and liquidity traps.