Money and Banking

Spring 2004

University Studies Abroad Consortium

Bilbao/Getxo, Spain

Instructor

Bernard Malamud

Professor of Economics, University of Nevada Las Vegas

e-mail:

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 the foreign sector. Prerequisites: Principles of Microeconomics and Principles of Macroeconomics

Course Objectives

After taking this course, you will understand the important roles played by banks and other financial intermediaries in the national and global economies; 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 industry. The relevance of economic analysis and policies will become evident to you as you follow events in the international financial sector that unfold during the semester. The importance of finance in the US, Spain, and the EU will be stressed.

Text

Frederic S. Mishkin, Economics of Money, Banking, and Financial Markets, 7th edition, Addison-Wesley, 2004.

Examinations and Grading

Two 150 point classroom exams and a 200 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. Makeup exams maybe arranged at mutualconvenience 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 final.

Approximate Grade Distribution

Average Score

(out of 500 points)

90 %Borderline A-

80Borderline B-

70Borderline C-

60Borderline D-

Attendance and classroom participation will affect your final grade.

Course Outline

Week of /

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.

/ Readings In Text
Jan 19
Jan 26
Feb 2
Feb 9
Feb 16
Feb 23
Mar 1
Mar 8
Mar 15
Mar 22
Mar 29
Apr 5-16
April 19
Apr 26
May 3

May 10

/

Financial Markets

Course Organization
Money, Banking, and Financial Markets: Key Concepts
The Financial System: Key Players
Money: Key Measures
Problems: Chapter 1/Problems 4,5,11 2/3,13,15 3/6,8,10
Understanding Interest Rates
Interest Rate Behavior
Risk and Term Structure
Problems:4/1,7,9,15 5/4,6,12,17 6/2,6,8
The Stock Market
The Foreign Exchange Market
Problems: 7/4,10 19/3,8,14
Catch-up and review

Classroom Exam, Chapters 1 – 7,19

Financial Institutions
Economic Underpinnings of Financial Structure
Banking Industry Structure
Non-Bank Financial Institutions
Problems:8/5,6,8,14 10/8,15 12/7,13

Monetary Policy

Central Banking: Federal Reserve System; European Central Bank
Determinants of the Money Supply
Monetary Policy Tools
Problems:14/5,8 15/15 16/3,10,11 17/2,7,8,11
Catch-up and review
Classroom Exam: Chapters 8,10,12,14-17

Spring Break

Conduct of Monetary Policy
Problems:18/3,4,7,11
Monetary Policies and Economic Performance: US and EU
Monetary Policy Strategies
Transmission Mechanisms of Monetary Policy
Problems: 21/4,6,7,10,18 26/9,11,12
Financial Crises: The US Experience
Catch-up and review

Comprehensive Final Examination

/ Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 19
Chapter 8
Chapter 10
Chapter 12
Chapter 14
Chapters 15,16
Chapter 17
Chapter 18
Chapter 21
Chapter 26