Welcome to Monetary Economics! Posted below are the course outline and various supplemental materials. Assignments are posted on GauchoSpace. New items will be posted throughout the quarter. Best check before each class.
• Link to GauchoSpace
Announcements/New Items
• I enjoyed teaching you and hope you will find the class useful in your career. Have a pleasant spring break!
• Information for Summer 2012 will be posted in mid-June. If the class fills up: I follow the waitlist procedures as posted by the Economics Department.
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 (Winter 2012): Mo & Wed 2-3pm, unless otherwise noted.
E-mail: bohn@econ.ucsb.edu. Always put "Econ 135" in the subject line.
Textbook: Mishkin, The Economics of Money, Banking, and Financial Markets, 9th edition.
• Suggestions on Readings
Note: All references in class are to the most recent, 9th edition. If you are using an older edition YOU are responsible for spotting differences. Though older editions have some similar content, some chapters are new and all the pages numbers are different. This course does not require access to the publisher's website. For the benefit of students who bought a new book, a MyEconLab code will be posted on GauchoSpace.Course Requirements:
Exam Dates: Midterm: Tuesday, February 14, in class.
Final: Wed. March 21, 7:30-10:30pm (set by the registrar).
The grade is based on six assignments (25% total), a midterm quiz (25%), and a final exam (50%). 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 no excuses of any kind are accepted, and no late submissions.
For more information about the exams see:
• General Information about Exams
The Problem Sets will help you study and reinforce the class material. Problem set content and due dates are posted on GauchoSpace.
The Monetary Economics Diary will reward you for keeping track of current events. The calculations will be explained in class. For written information, see Information about the Diary and the Note on Financial Data. The due dates and time periods for return calculations are posted on GauchoSpace.
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:
Alternative source is bloomberg.com:
- The Markets Data Center for financial data.
- The Online edition for general news, or the print edition. Most of WSJ.com is unfortunately subscription-based, though the data are 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.)
- Bloomberg.com: news - gives you current economic news. Check the headlines: Read stories that relate to the Fed, money, and broad financial markets.
- Bloomberg.com/markets/... - provides information on interest rates and links to other market data. Good for quick updates (for diary entries, WSJ is better).
Course Outline and Readings
Brief Course Description
Slides01
Mishkin ch.1.
Note on Financial Data
(2) Financial and Monetary Institutions
Slides02
Mishkin ch.2-3.
Mishkin ch.13 to page 333.
Recommended: Come With Me to the FOMC FRB Minneapolis
Recommended for browsing: Federal Reserve Credit and Liquidity Programs
Optional: Mishkin ch.8, remainder of ch.13.
(3) Interest Rates and Total Returns
Slides03
Mishkin ch.4
Example . [print & bring to class]
After this class you should be able to do the return calculations in the Monetary Economics Diary. For more information, read the Information about the Diary and review the Note on Financial Data.
Optional: FRBSF article on about inflation-indexed bonds
Part II. Classical Finance and Monetary Theory
(4) Demand and Supply for Financial Assets
Slides04
Mishkin ch.5 to page 108.
Recommended: online AppendixCh5#3.
(5) Demand and Supply: Applications
Slides05
Mishkin ch.6 to page 129.
Recommended: Mishkin ch.17, 433-437 and 441-448.
After this class you should be able to do Problem Set #1.
(6) Money and Prices: Theory
Slides06
Lecture Note: Classical: Read before class.
Recommended: Mishkin ch.19 to page 506.
Optional: Additional Notes.
Optional (Econ 101 review): Abel-Bernanke-Croushore, Macroeconomics, ch.7.3-7.5; or Williamson, Macroeconomics, ch.9.
(7) Money and Prices: Examples
Practice questions: Slides07. Try to answer the questions before class.
Optional: Mishkin ch.24 to page 620.
Part III. New Keynesian Monetary Theory
(8) Money and Output
Slides08
Lecture Note: Real Effects, Sections 1-3.
Mishkin ch.5, 108-end.
Optional (Econ 101 review): Abel-Bernanke-Croushore ch.9.1-9.5.
(9) Money and Interest Rates
Lecture Note: Real Effects, Sections 4-6.
Review for midterm:
Old midterm will be posted on GauchoSpace.
Read: Information about Exams.
(10) MIDTERM: in class.
Bring a small scantron card. Bring a picture ID.
(11) Money and Financial Markets
Slides11
Lecture Note: Markets .
Mishkin ch. 7 to page 158 (remainder optional).
(12) Monetary policy and the Term Structure
Slides12
Mishkin ch. 6, 129-end.
Optional: Lecture Note: Term Structure Application
Optional (for after class): Practice Problems.
After this class you should be able to do all of Problem Set #2.
Part IV. Banks, Money Supply, and Fed Funds
(13) Banking
Slides13
Mishkin ch.10.
(14) The Money Supply
Slides14
Mishkin ch.14.
Recommended: online Appendix14#1 and Appendix14#3.
Recommended: text of online Appendix14#2 (But ignore Summary Table 1; it has errors.)
(15) The Fed-Funds Market
Slides15 .
Mishkin ch.15.
Recommended for browsing: http://www.frbdiscountwindow.org/
(16) Central Bank Strategy (OMITTED )
Slides16
Recommended: Mishkin ch. 16.
(18) Additional Topics (NA)
Additional topics: TBA. Slides and readings would be posted later.
(19) Review for the final.
Old final will be posted on GauchoSpace.
Read: Information about Exams.
Next
FINAL EXAM
Bring a small scantron card. Bring a picture ID.
Please send comments and questions to bohn@econ.ucsb.edu
If you run into technical problems or errors, I would appreciate an email. Some links may only be accessible from a UCSB server.