ECON 230: Money & Banking, Spring 2000

Syllabus

SPRING 2000 - STORRS CAMPUS
MONEY, BANKING, AND FINANCIAL MARKETS
ECON 230/01

Prof. Steven R. Cunningham
Tuesdays and Thursdays, 12:30 – 1:45 PM
Classroom: 143 Monteith Hall
Office: 308 Monteith Hall
Tel.: 486-3550

Class website: http://professorcunningham.com
Textbook Website: http://www.awlonline.com/hubbard

Send Email to the Instructor

Course Summary

In this introductory undergraduate course, we analyze:

the monetary system,

the banking system and industry, and

the financial system, markets and industry,

monetary theory and policy,

and their relationships to one another. Obviously, the level and time constraints of the course are severe limits, so that the course is a broad survey, focusing on general structure, underlying principles, and recent controversies.

The course is designed specifically for economics and business majors. The course assumes (as a formal prerequisite) a thorough preparatory course sequence in economic theory and policy like ECON 111-112 (or ECON 113). Although a course in intermediate macroeconomics (like ECON 219) may be helpful, it is not necessary.

Required Text

Hubbard, R. Glenn. Money, the Financial System, and the Economy, 3rd Edition. Addison-Wesley. (2000) Required. The Study Guide is highly recommended. The website for the textbook has a number of helpful aids, including practice exams. I strongly suggest that you visit the site.

The Wall Street Journal. Subscription forms will be provided in class. Required. You will also find the WSJ website very useful. Get to know it!

Course Organization

Students meet en mass for two lectures per week with the professor. The course is organized around the required text, according to the attached schedule. We cannot present every detail of the material in the textbook in the classroom — we assume and expect that you will read the text.

Grading

There will be a mid-term, a (cumulative) final exam, and a series of written homework assignments related to the Wall Street Journal. The written assignments will be averaged to form one grade. Then the course grade is computed as the simple average of three grades: mid-term exam, assignments average, and final exam grade.

Class Schedule
(Chapters numbers are given in parentheses.)

Weeks 1-2: January 27 - February 3, 2000 (Overview)

Introduction to the course and instructor

Introducing Money and the Financial System (1)

Money and the Payments System (2)

Overvie w of the Financial System (3)

Weeks 3-4: February 8-17, 2000 (Interest Rates)

Interest Rates and Rates of Return (4)
The Theory of Portfolio Allocation (5)
Determining Markey Interest Rates (6)
Risk Structure and Term Structure of Interest Rates (7)

Weeks 5-6: February 22 - March 2, 2000 (Financial Markets)

The Foreign Exchange Market and Exchange Rates (8)
Derivative Securities and Derivative Markets (9)
Information and FInancial Market Efficiency (10)

Week 7: March 7-9, 2000 (Review and MidTerm Exam)

MIDTERM EXAM (Thursday, March 9)
MIDTERM EXAM GRADES, SPRING 2000

Week 8: March 14-16, 2000 (Institutions)

What Financial Institutions Do (12)
The Banking Industry (14)

Week 9: March 19-26, 2000
Spring Break!

Week 10: March 28-30, 2000 (Institutions)

Banking Regulation: Crisis and Response (15)

Banking in the International Economy (16)

Weeks 11-13: April 4-20, 2000 (Monetary Policy)

The Money Supply Process (17)

Organization of Central Banks (19)

Monetary Policy Tools (20)

The Conduct of Monetary Policy (21)

The International Financial System and Monetary Policy (22)

Weeks 14-16: April 25 - May 9, 2000 (Macroeconomic Theory)

The Demand for Money (23)
Aggregate Demand and Aggregate Supply (25)
Inflation: Causes and Consequences (28)

Wednesday, May 17, 2000, 1 - 3:00 pm (Updated)
Final Exam