Professor: M. Akacem
MONEY AND BANKING
ECONOMICS 4111-001: Fall 2006
OFFICE: Econ 10
OFFICE HOURS: Mondays and Wednesdays: 8:30 a.m. to 8:55 a.m. and 9:55 a.m.
to 10:55 a.m. on the same days in Econ 10 and by appointment.
Class will meet on M, W, F from 9:00 to 9:50 a.m.
The Class will meet in Education 220.
First Day of class: Monday August 28th, 2006
Pls note that I am sharing the office with a colleague and I may not
(probably will not) get your phone message. Pls come by during office hours
or see me at the end of class. Pls do use the office hours that are reserved
for you. Reserve E-mail messages only for emergencies. This
class has double the number of students normally assigned to a 4000 course
and it would be hard to keep up with E-Mail traffic with over 100 students.
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. Another note from the Department is that students may be administravely dropped if they miss the first 3 classes. Remember, there is usually a wait list, so please do attend. Finally, please consult the new honor code and the policy for student classroom behavior. These can be 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 do so immediately. Ask me any question you may have about the class during the first week. To make the syllabus user friendly, the semester is broken into weeks and unit, each with a topic, chapter number(s) and page(s). You will also find other relevant information on exams and grading. However, the course will cover material that is NOT in the text and this will be driven by events in the Financial markets both domestically and globally. I will be using other sources such as The Economist, The Wall Street Journal, The Financial Times and others. Case studies and guest speakers may also alter the pace of the course, so be in class. That is the only way to stay informed and do well.
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 lectures/discussion
as well as text and other sources discussed in class. These will only be announced
IN CLASS. 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. 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 and
The Econmist is extremely important. I will be assigning specific articles to
read for class discussion and as an assignment for the exam(s). I will try to
keep you informed as to which articles I think are relevant to our class discussion
throughout the semester. However, the pace and coverage of
topics will be fluid and the lecture format will be interactive, with discussion
of topics, issues, articles etc.. and will not recite the text
Back to the top:
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 repeal
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.
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 following exam.
Back to the top:
III.Main Text: Money, the Financial System, and the Economy,
Fifth Edition by R. Glenn Hubbard, Addison Wesley, 2005.
Make sure you shop around. You can get used copies from these sites when available.
http://www.cubookswap.com
http://www.half.com
http://www.amazon.com
http://www.barnesandnobles.com
http://www.cheapesttextbooks.com/IM/?gclid=COK65Z2e-YYCFSbuPgod-F_WXw
There are other sites where you can get a used copy or even a new copy
at lower price. This book has been used last semester so you should be able
to get a good used copy. Make sure it is the right edition.
To practice using quizzes from your old edition's home page
at: http://www.awl.com/hubbard and
click on student resources. Remember that the publiher may remove this at anytime.
If you bought a new text, you should have access to My Econ Lab which will give
you access to updated material and pratice quizzes. If the old site is still
working, 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. Do as many as
you can.
Other texts and references that are optional reading for the course:
Check the different sites of the Federal sytem listed on the class homepage
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
E-Reserve: Material will be added to the E-Reserve and an annoucement
will be made in class if you need to check material through E-Reserve..
Back to the top:
V. READING OF The
Wall Street Journal IS A MUST:
Articles from The Wall
Street Journal that pertain to our class will be discussed in class
throughout the semester. 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: (This may change):
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:
For the one semester subscription you need to go to:
http://subscribe.wsj.com/semester
Steps to subscribe for the WSJ:
1. For the zip code, type in: 803
2. Then choose, University of Colorado, Boulder
3. Then fill in the fields and for your professor it should be (is) the
first one: Akacem
You should get the paper rather quickly. If you have any problem, please
do let me know.
This will be for a one semester or 15 weeks for $19.95 which includes the paper
and the interactive edition where you can back search for up to 90 days.
VI. COURSE OUTLINE:
The pace and coverage will vary:
Week One: Outline One: Introduction:
Chapters 1, 2 and 3
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Two: Outline One: Continued: Chapters: 1,
2 and 3 Continued.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Three: Outline 2 : Chapter: 14 and 15 from
the main Text and part of 13 (pages 276 to 283). Parts on credit risk and liquidity
risk will be covered by Mr. Greg Carter, the bank examiner from the Federal
Reserve.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
If possible, and depending on his schedule, Mr. Greg Carter will give a talk
to the class.
Week Four: The Banking Industry Continued: same
as week Three
Case Studies viewed in class:
1. Other People's Money
2. The Greatest American Bailout
Week Five: Outline Three: The Savings & Loans
crisis: Class discussion based on the case studies viewed in class.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
If time permits, we will view the case study titled: "Dow Jones",
a history of the Dow Jones average. (Already Shown)
Exam One: October 2nd and October 4th, 2006.
The first part of the exam will be given on Monday and the second part on Wednesday.
Week Six: Outline Four: The Federal Reserve System:
Organization of Central Banks, Chapters 19
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Seven: Outline Five: The Money Supply Process,
Chapters: 17.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Eight: Outline Six: Chapters: 17 continued:
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Nine: Outline Seven: Chapter 18 (pages 425
to 430) and Chapter 20: Monetary Base and Budget Deficits, Monetary Policy Tools
and the Federal Funds Market
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Ten: Outline Eight: Goals and Tools of Monetary
Policy, Targets and Instruments, Chapter 21.
Before Exam 2, we will watch the following case studies as time permits
(one other one depending on time). I will announce in class before I schedule
them and will try to note it on the Webct calendar:
The Wall Street Fix
The Secret History of the Credit Cards
Any material from: The WSJ, The Economist, The Financial Times or any
current events dealing with Banking and Finance.
Exam 2: Monday November 6th and
Wednesday November 8th, 2006. The
first part of the exam will be given on Monday and the second part on Wednesday.
Week Eleven: Outline Nine: Decline of Traditional
Banking as We Know It. Lecture material. See article at:
http://www.newyorkfed.org/research/epr/95v01n2/9507edwa.pdf
Week Twelve: Outline Ten: Emerging Market Debt,
Debt Conversion and the External Sector. Lecture material. There is not much
material on this subject in chapter 22, even though the discussion of exchange
rates is relevant.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Thirteen: Fall Break
Week Fourteen: Outline Eleven: Exchange Rates,
Capital Flows and the Asian Currency Crisis, The European Monetary Union, Chapters
8, 22 and Lecture Material.
Any material from: The WSJ, The Economist, The Financial Times
or any current events dealing with Banking and Finance.
Case studies planned: The Crash (case study covering the Asian currency melt
down)
and The Trillion Dollar Bet (case study covering the failure of LTCM)
Week Fifteen: Outline Twelve: The Euro, Lecture
Material and if time allows The Junk Bond Market, Lecture material.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Week Sixteen: Outline Thirteen: Stock
Market Crash of 1929 and 1987. See the reading from the WSJ on E-Reserve. Lecture
Material.Case study: The Crash of 1929. Role of, or lack of, The Federal Reserve.
Any material from: The WSJ, The Economist, The Financial Times or any current
events dealing with Banking and Finance.
Final Exam: Wednesday December 20th, 2006, from
7:30 a.m. to 10:00 a.m.
Holidays: Labor day, Monday September 4th and
Fall break during Thanksgiving week from November 20th to November 24th, 2006.
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 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. Weddings, travel plans etc. will not do. 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.
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.
X. EXAM DATES: A Recap:
Mark your calendar:
| Exam One: October 2nd
and October 4th, 2006 in the same room as the class. |
| Exam Two: Monday
November 6th and Wednesday November 8th, 2006 in the same room as the class. |
| Exam Three:
Wednesday December 20th, 2006, from 7:30 a.m. to 10:00 a.m. You can check
the finals' schedule for this class and others at: All the material covered in class between the
second exam and the last exam which MAY be more than what is listed above.
Please note that the exam starts at 1:30 p.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 the exam. 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. |
XII. INTERNET AND WORLD WIDE WEB
SOURCES:
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 Fall 2006 class schedule. It has the full calendar
for the Fall 2006 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.