Readings and Other Assignments
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ECON 3113: Money, Banking, and Financial Markets
Prerequisites: ECON 1111 and 1112 (or consent of instructor)
Class time: MWF 9:15-10:20, IH 112
Professor: Arne Kildegaard
Office: Camden 202, phone: x6190
Office hours: Monday 2:30-4:30 p.m.; Thurs. 9:00 a.m. - 11:00 a.m. Also available at other times, by prior appointment.
Description: This 4-credit course is designed to help the student understand and think critically about the rapidly changing world of banking and financial markets.
In the first part of the course we will map the geography and nomenclature of major financial operations, the computational issues associated with them, where and why they are carried out, and by whom. We’ll study “bond pricing,” “yield curves,” “interest rate determination,” both descriptively (“what are they?”) and analytically (“how can we explain their behavior at different points in time?”).
The middle part of the course concerns banks, specifically, due to the unique niche they occupy in the overall financial system. Here we will study balance sheets in some detail, what some of the sources of banking instability are and how those have been more or less successfully addressed by various attempts to regulate or deregulate in recent years, and what the state-of-the-art is in prudential regulation.
The latter part of the course looks at the historical evolution of the modern monetary and banking systems, from the outset of the U.S. republic through the remarkable changes underway at present. We will study the on-going cat-and-mouse game between financial regulation and financial innovation, with a special emphasis on understanding how loop-holes and perverse incentives have occasionally led to outbreaks of financial crises with spillover effects on the rest of the economy. By the end of the course, students should be able to read and critique articles from the financial press.
Readings: The required textbook is Robert E. Wright and Vincenzo Quadrini (2009): Money and Banking (Flatworld Knowledge). There are various ways to access and/or buy the book, through the website: http://www.flatworldknowledge.com , including a) reading it on-line for free; b) downloading a full printable pdf version of the textbook (for about $20); c) buying a black-and-white paperback bound copy (around $30; this would be my personal recommendation); d) etc. (If you’re ordering the book, please do so immediately, since it will take about a week to arrive). Other assigned readings will be either a) placed on reserve in Briggs Library; or b) downloadable in pdf format from JSTOR at Briggs Library; or c) available as scanned documents on the course website.
Exam Schedule:
Midterm 1: Wednesday September 30th (tentative)
Midterm 2: Friday November 13th (tentative)
Final Exam: Monday December 14th, 8:30-10:30 a.m.
Grading policy: Grades will be based on a series of homework assignments (drop lowest score; the remainder sum to 25% of the final grade), on two midterms (@20%) and a final exam (25%), and a short paper on some historical financial crisis (10%).
Attendance policy: Under normal circumstances, class attendance is emphatically recommended for your intellectual, material, and spiritual well-being.
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University of Minnesota Policies
Grading standards (definition of grades)
A Represents achievement that is outstanding relative to the level necessary to meet course requirements.
B Represents achievement that is significantly above the level necessary to meet course requirements.
C Represents achievement that meets the course requirements in every respect.
D Represents achievement that is worthy of credit even though it fails to meet fully the course requirements.
S Represents achievement that is satisfactory, which is equivalent to a C- or better.
F (or N) -- Represents failure (or no credit) and signifies that the work was either (1) completed but at a level of achievement that is not worthy of credit or (2) was not completed and there was no agreement between the instructor and the student that the student would be awarded an I (see also I)
I -- (Incomplete) Assigned at the discretion of the instructor when, due to extraordinary circumstances, e.g., hospitalization, a student is prevented from completing the work of the course on time. Requires a written agreement between instructor and student.
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Make-up quizzes and exams are available only when a student has an excellent reason for missing the regular quiz or exam and arrangements are made either before the missed quiz or exam or as quickly as humanly possible thereafter.
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