Economics 220: Money, Banking, and Monetary Theory
Prerequisites: Econ 51 and 52
Prof. Lawrence H. White lwhite@umsl.edu
Required text:
Roger LeRoy Miller and David D. VanHoose,
Money, Banking, and Financial Markets (South-Western, 2001). (Abbreviated
"M&V" below.)
Course materials, containing supplemental notes on material covered in class and sample exams, are available online at mygateway.umsl.edu/courses.
Overview:
This course aims to provide a critical
understanding of the theory, history, and policy of monetary and banking
institutions. We will be covering a lot of ground. Lectures will be coordinated
with chapters of the required text (as indicated below), but will also
amplify, modify, and supplement what is found there. Understanding the
text is crucial, but is not enough: equally important for mastering the
course material is taking good lecture notes and studying them.
Requirements:
The respective grading weights on these
will be 54% (18% times 3), 15% (5% times 3), and 31% (total 100%), unless
extra weight is added to your final as explained below.
Fine Print:
The following policies are
stated as a matter of record: (1) Collaboration on problem sets is allowed.
You may hand in, fax, or email a problem set early. Late problem sets will
receive a grade of zero. Missed problem-set points will be added to the
weight on your final exam. (2) The midterm exams will each be given only
on the dates scheduled; no make-ups. If you miss a midterm exam for any
reason, 18 percentage points will be added to the weight of your final.
(Note well: final exam percentage scores tend to be lower than any of the
midterm scores, which means that missing a midterm exam when you don't
have to is not a wise strategy.) You may not discard a midterm after you
take it, and missed points on a midterm you do attend will not be added
to the weight on your final exam. (3) Failure to take the final exam at
the scheduled time will result in an exam score of zero (absent a valid
medical excuse or certified exam conflict). (4) Performance on these exams
and problem sets will be the only basis for grading (no additional "extra
credit" projects will be offered or accepted). Grades are not negotiable.
(5) Exam-taking is governed by the University's academic honesty policy.
(6) No student may leave a midterm exam before 25 minutes have elapsed,
or the final exam before 45 minutes have elapsed; no student may enter
a midterm or final exam after anyone has left.
Schedule of Lectures, Exams, and Readings
Note: Numbers below correspond to the 30 class meetings, but the schedule is highly tentative. We may at times be ahead; at other times behind.
A. Fundamentals of Money and Financial Markets
1-2. The nature and evolution of money (read: M&V ch. 1)
3. Financial contracts and markets (read: M&V ch. 3)
4-5. Interest rates and bond prices (read: M&V ch. 4)
6. Financial instruments and interest-rate risk (read: M&V, pp. 206-218)
7-8. Banks versus non-bank intermediaries (read: M&V, ch. 10)
9. First exam
B. Commercial Banking and its Regulation
10-11. The origins, history, and future of banking (read: M&V, chs. 2, 11)
12. Revenues, costs, and profits in banking (read: M&V, ch. 12-13)
13. Offshore and international banking (read: M&V, ch. 5)
14-15. Bank runs and deposit insurance (read: M&V, ch. 14)
16-17. Other regulatory issues: geographic and activity restrictions, lending discrimination (read: M&V, ch. 15)
18. Second exam
C. Central Banking, Monetary Policy, and the Economy
19. The money supply process (read: M&V, ch. 16)
20. The evolution of the Federal Reserve System (read: M&V, ch. 17)
21. The policy functions of the Fed (read: M&V, ch. 18)
22. The demand to hold money (read: M&V, ch. 19)
23. Monetary policy and interest rates (read: M&V, ch. 20)
24-25. Money, inflation, and real output (read: M&V, chs. 21-22)
26. Money and exchange rates (read: M&V, chs. 6, 28)
27-28. The options for monetary policy (read: M&V, chs. 25-27)
29. Third exam
30. Review
Final exam