Money, Banks & Central Banks: Deposit Creation, the Quantity Equation & Policy-Rate Rules
Follow money from a central bank balance sheet through banks to prices in one fictional economy: money aggregates, deposit creation and the money multiplier, MV = PY, a rule-based policy rate, real rates and the policy stance, seigniorage and an inflation-target scorecard, with every cell checked as you go.
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About this course
This course follows money through one fictional economy in eight spreadsheet labs. You build M1, M2, M3 and the monetary base with SUMIF, trace a new deposit through ten rounds of lending and find the limit of the series with reserve and cash leaks, then compute the money multiplier from banking statistics. You use MV = PY to get velocity, compound growth rates and the inflation implied by a money-growth plan. You calculate a Taylor-type rule rate, classify real policy rates as tight, neutral or loose with IFS, roll a central bank balance sheet forward after asset purchases, measure seigniorage and the inflation tax, and score 12-month inflation against a target band. Every cell is checked as you go.
Lessons
- Counting Money: Currency, Deposits and the Aggregates M1 to M3 Pro
- Deposit Creation: Rounds, Leaks and the Money Multiplier Pro
- The Quantity Equation: MV = PY, Velocity and Implied Inflation Pro
- A Rule-Based Policy Rate: Inflation Gap, Output Gap and the Deviation Pro
- Policy Stance: Real Rates, the Neutral Rate and Tight vs Loose with IFS Pro
- The Central Bank Balance Sheet: Asset Purchases, Reserves and Bank Liquidity Pro
- Seigniorage and the Inflation Tax in a Simple Steady State Pro
- Inflation-Target Scorecard: 12-Month Inflation, the Band and the Chart Pro