Monetary Economics
Econ 135
Summer 2009 - 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.

• Jump to Next Class

Announcements/New Items

• Course outline for Winter 2010 will be posted in late December.

• It appears the Winter class filled up quickly. If you are trying to add: (1) check on Gold for openings; or (2) get on the department waitlist when it opens; and (3) attend the first class and make sure you get on the signup sheet. For all waitlist questions, see the Econ Undergraduate office.

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 09): Mo & Wed 1:30-3:30.
 
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 having to track the differences between editions. (Though many chapters are identical, some are new, and pages numbers don't match.) Do not use the 6th or older editions as the content has changed too much. This course does not require assess to the publisher's website or supplemental materials.
Course Requirements:
Exam Dates:    Midterm: Tuesday, June 30, in class.
                        Final: Thursday, July 9, in class.
The grade is based on six assignments (25% total), a midterm quiz (25%), and a final exam (50%). For more information about the exams see:
• General Information about Exams and Grading

The assignments are 3 Problem Sets and 3 Monetary Economics Diary entries. Each assignment is worth 5 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.

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, June 29.
• Problem Set #2: Monday, July 6.
• Problem Set #3: Wednesday July 8.

The Monetary Economics Diary will reward you for keeping track of current events. The calculations will be explained in Classes #2-3. For written information, see:
• Information about the Diary and the Note on Financial Data     
The due dates and periods for return calculations are as follows:
• Entry #1: Due June 25.
    For the returns, use starting date June 19 and ending date June 24 or June 25.
• Entry #2: Due July 2.
    For the returns, use starting date June 24 or June 25 and ending date July 1 or July 2.
• Entry #3: Due July 8.
    For the returns, use starting date July 1 or July 2 and ending date July 7 or July 8.
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 2009].

Course Outline and Readings - Summer 2009

   Next:

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

June 23

(2)    Financial and Monetary Institutions

June 24

(3)    Interest Rates and Total Returns   

Part II. Monetary Policy and the Macroeconomy

June 25

(4)    Demand and Supply for Financial Assets

(5)    Demand and Supply: Applications  

June 29

(6)    Money and Prices: Classical Theory    

(7)    Money and Prices - Examples.

June 30

(9)    MIDTERM: in class.

Bring a small scantron card. Bring a picture ID.
Multiple choice only; about 45-60 min. Then take a break.
Class resumes at 11:10 - current topics.

July 1

(8)    Money and Output: Keynesian Theory

(10)    Money and Interest Rates

Lecture Note: Real Effects, Sections 4-6.

Part III. Rational Expectations

July 2

(11)    Money and Financial Markets

(12)    Monetary policy and the Term Structure

Part IV. Banks and the Money Supply   

July 6

(13)    Banking and Money Supply 

July 7

(15)    The Fed-Funds Market

(16)    Central Bank Strategy (omit)

(17)    Topics: Exchange Rates and Foreign Money

              Tentative. Topic may change in response to current events.
              Slides and readings to be posted later.

July 8

(18)    Review

July 9

(19)    FINAL EXAM: in class.

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