Important Note: If you have not met the prerequisites for this class, you would need to drop it as per the Department of Economics' policy. We are asked to enforce this, so if any student who shows up on the roster with prerequisites that have not been met, will be dropped. Please consult advising at the Econ Dept, if you have any question about this. I am merely following the guidelines. Another note from the Department is that students may be administravely dropped if they miss the first 3 classes. Remember, there is a wait list, so please do attend. Finally, please consult the new honor code and the policy for student classroom behavior. These can viewed at: http://www.colorado.edu/policies/index.html

Important Note
Objective of the Course
Main Text
Material on Reserve
The Wall Street Journal
Course Outline
Grading
Stock Market Game
Exam Dates and Missed Exams
Office Hours
Internet and World Wide Web use
Policies

I. IMPORTANT NOTE: Please read the syllabus carefully and so immediately. Ask me any question you may have about the class during the first week. Some of the questions that you may have about the course are answered in it, however, do not hestitate to talk me if something is not clear. It also provides you with a good guide to the progress of the course as well as the chapter assignments, exam dates etc... To make the syllabus user friendly, the semester is broken into weeks and unit, each with a topic, chapter number(s) and page. You will also find other relevant information on exams and grading. Having said this, events and guest speakers may alter the pace of the course so be in class.

II. OBJECTIVE OF THE COURSE:

First, let me advise you that attendance is MANDATORY and if you miss class, do so at your own risk. Exam will be drawn from class discussion as well as text/class notes posted on the web. Neither the text not the class notes are replacement for being in class. We will be showing a number of case studies and these audio visual tapes are not and cannot be put on reserve nor can they be lent out. They are equivalent to a lecture. This course has a number of objectives, but one of them is to teach you the fundamentals but then go far beyond them by applying the theory to what is taking place in the U.S. and overseas. To this end, we will make use of the Wall Street Journal. The assigned text is your standard source for some of the material covered in class, but sometimes lectures will go beyond the text. You are expected to be prepared for each unit by reading ahead of time and attending regularly. We will try to apply what we know and use a lot of examples from current financial and banking developments in the U.S. and other countries or regions such as the Asian Currency turmoil. Reading of The Wall Street Journal is extremely important. Do not wait for me to assign an article via the Forum. In order to get the maximum benefit from this class, I expect you to read it on a daily basis and contribute your feedback via the forum to the whole class. You do not need read the whole paper, only the topics that are of interest to you. Once in a while, I will be making some suggestions for some specific articles to read and ask for your reaction. I will try to keep you informed as to which articles I think are relevant to our class discussion throughout the semester.

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Overall, the course will cover the relevant issues in the money and banking field, with an emphasis on institutions, policy and markets. The course assumes that you are already well versed in Macroeconomics. However, this course is not meant to be a rehash of upper division Macroeconomics. Check the prerequisites for taking this course. Part of the course will be spent discussing banking regulation and its impact on the banking industry. The aftermath of the repealing of the Glass Steagall act (separation of banking and commerce) Did we learn something from the Banking and Savings and Loans crisis ? What are the policy implications for the U.S.' Financial system. The course will also examine the proposals of Market Value Accounting for financial institutions. Should Deposit Insurance be scrapped for example? We will also be discussing the role of monetary policy, and that of the Federal Reserve and their impact on the U.S. banks and the economy in general. Finally, we will cover exchange rates and the Federal Reserve's role in the foreign currency market.

Towards the end of the semester and if time permits, I will try to add a unit on the European Monetary Union and the Asian Currency Crisis. However, depending on the pace, this may be covered earlier. Throughout the course, we will be referring and using not only the main text but also articles from the Congressional Research Service, the Board of Governors of the Federal Reserve and the other regional Federal Reserves. Finally, I highly encourage you to visit the different sites of the different Federal Reserve banks. You will be surprised at how much information you will find. It will complement the lecture units nicely with up to date information.

GUEST LECTURES:

Finally, one unique and important aspect of this course is the use of outside speakers as well as the showing of case studies. The dates of these events will be announced in class. One will be from the Federal Reserve Bank of Kansas City on Bank Examination by a bank examiner from the Examination Department. Another will be from the Securities and Exchange Commission and one from a hedge fund on derivatives. We may also have someone from Wells Fargo bank. This is conditional on the guest lecturers being able to come to our campus on the dates that they are available. Attendance is MANDATORY and any material covered during these guest lectures is considered fair game for the Final. As noted earlier, we will also be watching case studies in class dealing with banking issues, the stock market, Dow Jones and the 1929 crash and the dates for when we show these tapes will be announced in class.
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III.Main Text: Money, the Financial System, and the Economy, Fourth Edition by R. Glenn Hubbard, Addison Wesley, 2002.

The class had a homoepage but we have moved to a WebCT environment and can be accessed at: http://webct.colorado.edu

To practice using quizzes from your text's home page to to: http://www.awl.com/hubbard and click on student resources. There you will see a list of chapters and you can click on the chapter that you need. On the left menu, you will see an icon for quizzes as well as short essays. You can either or b both and you will get instand feedback and the correct answers.

Other texts and references that are optional reading for the course:
"Secrets of the Temple: How the Federal Reserve Runs the Country", by William Greider, Simon and Shuster, 1987
"American Finance for the 21st Century" by Robert E. Litan with Jonathan Rauch, The United States Department of the Treasury, November 17, 1997.
"U.S. Monetary Policy and Financial Markets", by Ann-Marie Meulendyke, Federal Reserve Bank of New York, 1998 (Chapters 1,2,3,4,9 and 10).
"Using The Wall Street Journal", Fifth Edition, by Michael Lehmann, Irwin 1996 (particularly chapters 4, 11 and 12).
"Liar's Poker", Michael Lewis, Norton, 1989.
"The Money Market", by Marcia Stigum, Dow Jones irwin 1990 or later editions, Chapter, 9 (The Most Watched Player, The Fed)
"Instruments of The Money Market", by Timothy Cook and Robert LaRoche, (chapters 1 to 3) Federal Reserve Bank of Richmond.
"U.S. Monetary Policy: An Introduction", Federal Reserve Bank of San Francisco, 1995 (will be left on reserve).
"Economics: A Guide for the Financial Markets", by Neil MacKinnon and Paula Neal, IFR books, 1992.
"Stocks for the Long Run", by Jeremy Seigel, Irwin.

IV. Material on Reserve at the Library:

Book on Reserve: (Purely Optional) Banking Regulation, Its Purposes, Implementation, and Effects, By Kenneth Spong, 4Th Edition, Federal Reserve Bank of Kansas City, Chapters 1-4. I do not always leave this on reserve given the large class and the fact that the material will be covered in class, by the bank examiner as well as covered in your text.

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V. READING OF The Wall Street Journal IS A MUST:

Reading The Wall Street Journal on a daily basis is as valuable, if not more, than the text. Those of you who want to subscribe need to fill out the form that I will be passing out during the first day of class or can do so electronically since I do not always have enough sign up copies.

Articles from The Wall Street Journal that pertain to our class will be discussed in class throughout the semester. One question on the final last semester was from one of these discussions. So be there or if you miss class, stay informed through a friend or a colleague from class. If you cannot afford a subscription to the Journal, you can always have access to it at the campus Library or the public library. Once you subscribe to The Wall Street Journal, you will have access to the Interactive Edition via the Internet. The whole journal will be accessed via the web with your special password (instructions will be sent you by the WSJ on how to access the Internet edition). You will also get access to the following journals and magazines: (as of last semester):

1. The Wall Street Journal (U.S. edition)
1. Barons' Weekly
2. Smart Money magazine
3. The Wall Street Journal Europe
4. The Wall Street Journal Asia (as of last spring, all these were accessible).

First, you need to take a tour of the what is in the Journal. Here are two sites. One is for the Print edition and one is for the Interactive Edition. You will get both if you subscribe so it is nice to look at both anyway:

Print Journal tour : http://tour.wsj.com

Interactive tour or the wsj.com tour : http://wsj.com/tour

For the one semester subscription you need to go to:

http://subscribe.wsj.com/semester

This will be for a one semester or 15 weeks for $34.95 which includes the paper and the interactive edition where you can back search for up to 30 days. This is what students normally get.

For the zip code, type in: 803

Then choose, University of Colorado, Boulder

Then fill in the fields and for professor, pick mine, it should be (is) the first one: Akacem Mohammed

You should get the paper rather quickly. If you have any problem, please do let me know.

VI. COURSE OUTLINE:

Week One: Introduction: Chapters 1, 2 and 3 , OUTLINE NUMBER ONE

Week Two: Chapters: 1, 2 and 3 Continued, OUTLINE NUMBER ONE (continued)

Week Three: Finish OUTLINE NUMBER ONE and start on: The Banking Industry Chapters: 1 and 2 from Kenneth Spong's book (On Reserve), Chapter: 14 and 15 from the main Text and part of 13, OUTLINE NUMBER TWO

Week Four: The Banking Industry Continued: same as week Three, OUTLINE NUMBER TWO CONTINUED

Week Five: Finish OUTLINE NUMBER TWO and start on: The S & L crisis . Start OUTLINE NUMBER THREE

Week Six: The Federal Reserve System, Chapters 19, OUTLINE NUMBER FOUR

Week Seven: Money Creation, Chapters: 17, OUTLINE NUMBER FIVE

Week Eight: Chapters: 17 and material covered in class Monetary Base and the Money Supply Model OUTLINE SIX

Week Nine: Monetary Base and Budget Deficits Monetary Policy Tools and the Federal Funds Market Chapter 18: pp. 466-477 and Chapter 20, OUTLINE NUMBER SEVEN

Week Ten: Goals and Tools of Monetary Policy, Targets and Instruments, Chapter 21, OUTLINE NUMBER EIGHT

Week Eleven: Decline of Traditional Banking as We Know It: The End of Glass Steagall? Lecture material (and other if necessary), OUTLINE NUMBER NINE

Week Twelve: Emerging Market Debt, Debt Conversion and the External Sector, Chapters 22 starting on page 564 and Lecture Material, OUTLINE NUMBER 10

Week Thirteen: Exchange Rates, Capital Flows and the Asian Currency, The European Monetary Union, Chapters 8, 22 and Lecture Material. Check the home page listed in Unit Fourteen on our class home page. OUTLINE NUMBER ELEVEN

Week Fourteen: The Junk Bonds Market, Lecture Material, OUTLINE NUMBER TWELVE

Week Fifteen: Stock Market Crash of 1929 and 1987, Lecture Material. OUTLINE NUMBER THIRTEEN

Week Sixteen: The Asian Currency Crisis. Doubtful that we will have the time, but if we do, we will spend some time on it and visit a special home page dedicated to it.

Holiday: Labor Day, Monday 09-1-03 and Thanksgiving, 11-27 and 11-28.

NOTE: Posted on the class home page are all of the outlines as well as a summary of the lecture notes. I may be making some changes during the semester, so to be on the safe side it may not be wise to print the whole thing all at once. Remember, the University is starting to charge students for copies made at the labs after a certain amount of printed pages. Again, the lecture units (notes) will be updated whenever there is need, so if you print them early you may have to do so again. The outlines will also be updated and topics covered in class will go beyond what is on the outline. So your attendance is a must. Miss class at your won risk. I will inform you of any major updates.

VII. GRADING:

You will have a TOTAL of three (3) EXAMS. Please read the following carefully. There are NO Make Up exams so plan ahead. A missed exam is an automatic "F" and the you will have the remaining weights only. The only exception will be for a well documented medical emergency for that specific day. The final will have to be taken on the date indicated below. There are NO EXCEPTIONS. Cheating will result in an automatic F for the course and will be reported as per the University policy.

Three Exams:

The weights on your exams will be 25%, 35% and 40%. The best of the first two exams will carry a 35% weight, the second best 25% and the Final will carry a 40% weight.

How do I use the weights to estimate my overall grade?

Here is an example: Let us assume that you received a 70 in the first test, and 82 in the second test and an 87 in the last test. Remember, that you don not know what the last grade is (at least not yet), but you can guess based on your performance. Take 35% of the highest grade from the first two tests: or 82 times 35% which is 28.7 (.35 * 82). Take 25% from the second highest grade from the first two tests: or 70 times 25% which is 17.5 (70 * .25) and finally 40% of the final or .40 times 87 is 34.8 (.40 * 87). You add the 3 numbers [28.7 + 17.5 + 34.8 = 81], or a B. You can do this even before you take the first test by simply estimating what grades you may receive and see what overall grade you end up with.

As mentioned earlier, even if you do not have all the grades, you can still estimate your overall total. Let us say that you do not have the grade for the final, which is usually the case. Put in a grade that is close (just guess based on your performance), and you can estimate your overall total. You can also estimate what you need to have in any one of the tests to reach a given overall total.

IX. THE STOCK MARKET GAME:

There are a number of stock market games that are offered for free on the web (E trade for example and others). Feel free to try anyone of them and consult with me if you wish about strategy. This purely optional however, given that we only have 5 weeks (barely), I doubt that you will have enough time to play one of the game.

X. EXAM DATES and assignments: Mark your calendar:

NOTE:  You need to keep track of assignments that are not on the outlines but covered in class such as WSJ articles and/or tapes. These will not be covered or shown again (just as with lectures). These are part of upcoming tests so make sure you come to class and do stay informed if you miss.

Exam One: Monday, September 22nd, 2003 in the same room as the class. Assignments for exam one: Any Wall Street Journal article(s) discussed, audio visual tapes (cased studies) watched in class or guest lectures in addition to outlines 1, 2 and 3, chapters 1, 2, 3, 14 and 15. Lecture units 1,2 and 3. The first test will be Multiple choice.

Exam Two: Monday, November 3rd, 2003 in the same room as the class. Assignments for exam two: Any Wall Street Journal article(s) discussed, audio visual tapes (cased studies) watched in class or guest lectures in addition to outlines 4, 5, 6 and parts I and II of outlines 7. Chapters 19, 17, 18 (pp:484 to 489). Lecture units, 4, 5, 6 and parts I and II of lecture unit 7. The second test will be Multiple choice questions as the first.

Exam Three: Wednesday December 17th, 2003 from 1:30 a.m. to 4:00 p.m. Please note that the exam starts at 1:30p.m. you MUST be there at 1:30 p.m. in order to be able to take it. If you come after a student has finished and returned the exam, you will not be able to take it. It should not take you the whole allocated time. Just as with the 1st and 2nd exam, the exam will take place in the same room and on average takes between 30 minutes to one hour. Assignments for exam three: Any Wall Street Journal article(s) discussed, audio visual tapes (cased studies) watched in class or guest lectures in addition to outlines 7 (starting from part III), 8, 9 and 11. Chapters 20, 21, 8 and 22. For outline number 9, only the material covered in it. Booklet on "US monetary Policy: An introduction" Federal reserve bank of San Francisco, found at the following URL: http://www.frbsf.org/publications/federalreserve/monetary/MonetaryPolicy.pdf , page 12-16. The third test will be mutiple choice exam and essay questions (up to 2 with 2 parts each)

XI. OFFICE HOURS: M-W: 11:00 a.m. to 12:00 p.m., in office 4-C. or by appointment whenver possible

XII. INTERNET AND WORLD WIDE WEB SOURCES:

Check my home page for this class. You will find plenty of sites that are relevant to what we do in class. I particularly want you to visit the various Federal Reserves' sites as well as the board of governors where you can read the minutes of the Federal Open Market Committee meetings as well as other reports on the state of the US economy. If you find sites that you think could be helpful and are relevant to what we do, pls do not hesitate to let me have the address. I will be happy to add them.

XIII. Policies:

Religious Holiday and ADA policy:

I will enforce the religious holiday policy as well as the ADA policy for anyone who requires it. I would need to be notified during the first two weeks if anyone needs special a accommodation together with a letter from the ADA office.

Withdrawal

Check the Fallpring 2003 class schedule. It has the full calendar for the Fall 2003 with all the dates that you need (drop dates deadlines, refund etc...). I urge you to take a moment to look at it and note the important dates.