ECON 304 Section 1
Money
and Banking
Fall 2011 BEH
111 MW 1 – 2:15
pm
Instructor
Bernard Malamud
Office: BEH 502 Phone: 895 –
3294 Fax:
895 – 1354
Office Hours: MW 11:30 –
12:30 pm; 2:30 – 3:30 pm and by appointment
e-mail: bernard.malamud@unlv.edu Website: http://faculty.unlv.edu/bmalamud
Please communicate with me via your Rebelmail account, by phone, or stop by my office.
General
Nature of the Course
This
course treats the nature of money and the determination of the quantity of
money by the public, commercial banks, and the Federal Reserve. The course entails intensive analysis of
commercial banking, money and capital markets, interest rate determination, and
monetary policy. Prerequisites: Admission to a business major/ Junior Standing; Econ 103.
Course Objectives
After taking this course,
you will understand the important roles played by banks and other financial intermediaries;
the determination of asset prices in financial markets; the ways in which
financial institutions operate; and the conduct and impacts of monetary
policy. You will gain an appreciation of
innovations in financial practice, changes in financial regulation and
interactions between finance and the macroeconomy. The relevance of economic analysis and
policies will become evident to you as you follow financial events throughout
the semester. What happens to money,
banking and financial markets is critical to the performance of the U.S. and global
economies. Upon completion of this
course, you should be able to explain how monetary policies can promote
macroeconomic stability; describe the roles and functions of financial markets,
institutions, and policies; apply models of asymmetric information to explain
borrower and lender behaviors in financial relations; and use supply and demand
analysis to explain and predict outcomes in asset markets. Most importantly, you will understand and be
able to explain to this and future generations the roots, responses and
consequences of the subprime-triggered financial crisis.
Text and
Supplemental Readings
·
Frederic S. Mishkin, The Economics of Money, Banking and Financial Markets, 9th
edition. Boston: Pearson-Addison Wesley,
2009.
- Financial Crisis Inquiry Commission Report http://www.gpoaccess.gov/fcic/fcic.pdf
Supplemental
Books and Articles:
· Gillian Tett, Fool’s Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe, Free Press, 2009.
· David Wessel, In Fed We Trust: Ben Bernanke’s War on the Great Panic, Random House, 2009.
·
Andrew Ross Sorkin, Too Big to Fail. Viking, 2009
·
Simon Johnson and James Kwak,
13 Bankers :
The Wall Street Takeover and the Next
Financial Meltdown. Random House, 2010
·
Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still
Threaten the World Economy. Princeton, 2010.
·
Joseph Stiglitz, Freefall. W.W. Norton, 2010.
·
Perry Mehrling, The New
Lombard Street. Princeton University Press, 2011.
·
Gretchen Morgenson and Joshua Rosner, Reckless Endangerment. Times Books,
2011.
·
Articles in Journal
of Economic Perspectives (JEP),
Federal Reserve System publications, and other sources cited in this outline
and as added as the semester proceeds.
These can be accessed from the JEP
and Federal Reserve Bank websites and via the UNLV Library website.
Examinations and Grading
Three
100 - point classroom exams and a 150 - point comprehensive final will be given
this semester. You will be able to
rewrite your answer to one question
on each classroom exam at home. Your
score for the question will be the average of your classroom score and your
rewrite score.
Oct 5 Classroom Exam, Chapters 2 – 7 100
points
Nov 7 Classroom
Exam, Chapters 8 – 12 and Crisis
100
Nov
28 Classroom Exam, Chapters 13 – 16 100
Top “discussion problem”
pop quizzes (drop 1 or 2) 10 points each
Dec 12 Comprehensive Final Examination 1 – 3 pm 150*
Maximum Total Score 450+ points
* Heads Up: One question on your final exam will be, “Which of the
supplementary books for this course
did you read? i)
Give an overview of the book. Discuss
ii) the root of the 2007-2008 financial crisis according to the author; iii)
responses to the crisis and iv) consequences of the
crisis that the author cites; v) any reforms the author suggests; and vi) your
evaluation of the book.”
Approximate
Grade Distribution
Average Score
(out of 450+
points)
90 % Borderline
A-
80
Borderline B-
70
Borderline C-
60
Borderline D-
Attendance and classroom participation will affect your final grade.
Makeup Policy
Makeup exams may be arranged
at mutual convenience if you have a
compelling reason to miss a scheduled classroom exam. A makeup exam must be taken before the missed
exam is returned to the class. There
will be no makeup quizzes or final exam.
However, a student missing a class because of observance of a religious
holiday and students who represent UNLV at any official extracurricular
activity shall also have the opportunity to make up assignments. Such students must provide official written
notification no less than one week prior to the missed class(es).
Class Conduct
Your
instructor and classmates deserve courtesy.
If you must arrive late or leave early, do so quietly. Inform me beforehand if you must leave a
class early. Smoking and eating in class
are prohibited. Talking to your
neighbors in class, texting, and reading newspapers and magazines is rude,
disruptive, and unacceptable. While this
probably need not be said, anyone found
engaging in any act of academic dishonesty will be punished in accordance with
UNLV policies.
Other Information
The
Disability Resource Center (DRC)
coordinates all academic accommodations for students with documented
disabilities. The DRC is the official office to review and house disability
documentation for students, and to provide them with an official Academic
Accommodation Plan to present to the faculty if an accommodation is warranted.
Faculty should not provide students accommodations without being in receipt of
this plan.
UNLV complies with the provisions set
forth in Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities
Act of 1990, offering reasonable accommodations to qualified students with
documented disabilities. If you have a documented disability that may require
accommodations, you will need to contact the DRC for the coordination of
services. The DRC is located in the Student Services Complex (SSC), Room 137,
and the contact numbers are: VOICE (702) 895-0866, TTY (702) 895-0652, FAX
(702) 895-0651. For additional
information, please visit: <http://studentlife.unlv.edu/disability/>.
|
Dates |
Topics, Discussion Problems
Do each
“discussion problem” before class.
Treat it like homework. While
it will not be collected, you will be expected to participate in its
discussion. In addition, discussion problems may be given as 10-
point pop quizzes.
|
Readings In
Text |
|
Aug 29,31 Sep 5 Sep 7,12 Sep 14,19 Sep 21,26,28 Oct 3 Oct 5 Oct 10 Oct 12,17,19 Oct 24,26,31 Nov 2 Nov 7 |
Course Organization/Overview of the monetary economy · S.M. Potter, Some Observations & Lessons from the Crisis http://www.newyorkfed.org/newsevents/speeches/2010/pot100607.html · J.S. Lacey, What the Fed Did and Why http://www.newyorkfed.org/newsevents/speeches/2010/tra100625.html · M.K. Brunnermeier, Deciphering the Liquidity and Credit Crunch, Journal of Economic Perspectives (JEP), Winter 2009 http://www.aeaweb.org/articles.php?doi=10.1257/jep.23.1.77 · Adair Turner, The Recent Past of Finance. http://ineteconomics.org/video/full-video/recent-past-finance-adair-turner · Richard Koo, Balance Sheet Recession. http://ineteconomics.org/video/conference-kings/balance-sheet-recession-richard-koo Labor Day Recess Financial System Overview— Look at Problems Chapter 2/2,7 Money — Look at Problems
Chapter 3/8,10,14 Understanding Interest Rates and Present Value Behavior of Interest Rates: Bond Market/Money Market Problems: 4/2,6,9,12,15; 5/6,13,17 Risk and Term
Structure of Interest Rates Problems:6/3,5,6,9,11 · J.B. Taylor and J.C. Williams, A Black Swan in the Money Market, American Economic Journal, Macroeconomics, January 2009 Equity Prices: Efficient Markets and Bubbles Catch up and review Classroom Examination, Chapters 2 – 7 Economics of Financial Structure Problems:
8/1,5,6,11 Financial Crises Problems:
9/1,4,5,6,12,15 The Panic of 2007 · Financial Crisis Inquiry Report: Majority Report Conclusions; Minority Report · Perry Mehrling, The New Lombard Street, pp. 71 – 85. · Frank Partnoy, Infectious Greed. Times Books, 2003, pp. 81 – 85; 374 – 376. · J. Coval, et. al.,The Economics of Structured Finance, JEP,Winter 2009 http://www.aeaweb.org/articles.php?doi=10.1257/jep.23.1.3 · M. Kacpeczyk, P. Schnabl, When Safe Proved Risky, JEP,Winter 2010 http://www.aeaweb.org/articles.php?doi=10.1257/jep.24.1.29 ·
Krishnamurthy, How Debt Markets Malfunctioned in the Crisis http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.1.3 ·
R.M. Stulz, Credit Default Swaps and the
Credit Crisis
http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.1.73 Bank Management, Regulation, and Industry
Structure Problems: 11/7,13,14;12/4,10,12,13 Shadow Banking System · R.G. Rajan, The Credit Crisis and Cycle Proof Regulation. FRBStL Review, Oct 2009 http://research.stlouisfed.org/publications/review/09/09/part1/Rajan.pdf · G.H. Stern, Too Big To Fail: The Way Forward, FRBM Region, Dec 2008 http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4116 Catch up and review Classroom Exam, Chapter 8 – 12 and Crisis |
Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chs. 10,11,12 |