Monetary Economics
Econ 135
Summer 2008 - Henning Bohn
UC Santa Barbara


Welcome to Monetary Economics! Posted below are the course outline and various supplemental materials. New items will be posted throughout the quarter. Best check before each class.

Announcements/New Items [Last updated: 08/20/08]

• The next time I teach Econ 135 is probably Summer 2009. An updated outline will be posted later.

• Jump to Next Class

General Information

•    Brief Course Description .

Prerequisites: Econ 101 or equivalent preparation in Intermediate Macro is required for Econ 135. This is an essential prerequisite - no exceptions.

Office hours (Summer 08): Tu & Th 11-12.
 
E-mail: bohn@econ.ucsb.edu. Always put "Econ 135" in the subject line.

Textbook: Mishkin, The Economics of Money, Banking, and Financial Markets, 8th edition.
•    Suggestions on Readings
Note: If you are on a tight budget and have a friend who owns the current edition, you may get by with the 7th edition at the cost of some extra effort: You would have to check for differences between editions. Do not use the 6th or older editions as the content has changed too much.
Course Requirements:
Exam Dates:    Midterm: Wednesday, July __, in class.
                        Final: Wednesday, July __, in class.
The grade is based on two exams (midterm 30%, final 50%) and on six assignments (20%). The assignments are 3 Problem Sets and 3 Monetary Economics Diary entries. Each assignment is worth 4 points. You must submit at least 5 of the 6 assignments. If you submit all 6, the 5 best scores count. That is, you may miss one assignment without penalty, but in exchange, no excuses of any kind are accepted, and no late submissions.
For more grading and exam information see:
• General Information about Exams and Grading

The Monetary Economics Diary will reward you for keeping track of current events. The calculations will be explained in Class #3. For written information, see:
• Information about the Diary and the Note on Financial Data     
Entries are due by e-mail on July __, __, and __, by midnight.

The Problem Sets will help you study and reinforce the class material.
Here is the Problem Set File. Problem sets are due in class, on the following dates:
• Problem Set #1: Monday, July __.
• Problem Set #2: Monday, July __.
• Problem Set #3: Monday, July __.

News and market data:
You are expected to keep up with current macroeconomic news. The best source for financial and economic information is the Wall Street Journal: the online edition for data and news, the print edition for news. Most of WSJ.com is unfortunately subscription-based, but the Markets Data Center is currently free. Also, I understand you can access the full WSJ content through the UCSB Library. (But I don't keep up with how this works; best ask the Library.)

A good alternative source is bloomberg.com:
  1. http://www.bloomberg.com/news/economy - gives you current economic news. Check the headlines: Read stories that relate to the Fed, money, and broad financial markets.
  2. http://www.bloomberg.com/rates/index.html - provides interest rate data and links to other market data. Always check on the bond market (Fed Funds target, 3-month T-bill, 10-year T-note, 10-year TIPS), on the S&P500, and on the Euro and Yen exchange rates.

Technical Notes:
This web page is intended for UCSB students enrolled in Econ 135.
I may update this page and some of the readings during the quarter; please check periodically.
If you run into technical problems or errors, I would appreciate a note to:
bohn@econ.ucsb.edu. Some links may only be accessible from a UCSB server.
All lecture notes and overheads are copyrighted [(C) Henning Bohn 2008].

Course Outline and Readings

Next:

Brief Course Description
Introduction01     Slides01   
Mishkin ch.1. Mishkin p.81 and p. 433.
Note on Financial Data     

(2)    Financial and Monetary Institutions

(3)    Interest Rates and Total Returns   

Part II. Monetary Policy and the Macroeconomy

(4)    Demand and Supply for Financial Assets

(5)    Demand and Supply: Applications  

(6)    Money and Prices: Classical Theory    

(7)    Money and Prices - Examples.

(8)    Money and Output: Keynesian Theory

(9)    MIDTERM: Wednesday, July 9, in class.

Bring a small scantron card. Bring a picture ID.

(10)    Money and Interest Rates

Lecture Note: Real Effects, Sections 4-6.

Part III. Rational Expectations

(11)    Money and Financial Markets

(12)    Monetary policy and the Term Structure

Part IV. Banks and the Money Supply   

(13)    Banking and Money Supply 

(15)    The Fed-Funds Market

(16)    Central Bank Strategy [Omit]

(17)    Review

(18)    FINAL EXAM: Wednesday, July 30, in class.

Please send comments and questions to bohn@econ.ucsb.edu