C15.0021
Money, Banking and Financial
Markets
Fall 1997
Prof. Paul Wachtel
This is a course in Money, Banking and Financial Markets
which meets on Monday and Wednesay from 11:30 to 12:50 in MEC 1-70. The
first class session is on September 3rd.
Professor Wachtel's office is in the Stern Economics Department,
MEC 7-86. Office hours are from 9:00 to 11:00 on class days. However, Prof.
Wachtel is available at other times as well. An appointment is always advisable
-- call x80874 or Email PWACHTEL@STERN.NYU.EDU.
The TA for this course is Mr. Chris Brazell who will be
in class every Wednesday and will also be available on Wednesdays
in MEC 7-179 from 3:00 to 6:00. Consult Chris if you need a class
handout or an assignment or anything else. He will be in charge of collecting
and returning all assignments. Chris can be reached by Email at cb4@stern.nyu.edu.
Guide to Contents
IMPORTANT
DATES
ASSIGNMENTS:
CLASS
DISCUSSION - FOMC MEETING - September 29
RESEARCH
REPORT - December 3
EXAMINATIONS:
-
QUIZ
I - October 8
-
QUIZ
II - November
10
-
FINAL - DECEMBER 17 at 10:00 AM in MEC 1-70
GRADING
-
Assignments -- 15 % (Assignments must be submitted on date
due for credit.)
-
Quiz I and Quiz II -- 25 % each
-
FINAL -- 35 %
TEXT
and READING
L. Ritter, W. Silber and G. Udell, Principles of Money,
Banking and Financial Markets, 9th ed. Addison-Wesley, 1997. (called
RSU in course outline)
M.A. Akhtar, Understanding
Open Market Operations, Federal Reserve Bank of NY, 1997.
Wachtel's Readings Packet for C15.0021 (items referred
to by name in outline).
Course
Outline
1. Monetary Economy
-
Real and nominal interest rates
-
Barter, payments and a money economy
-
Money, inflation and output - Definitions and relationships
-
How much money should there be?
Reading
RSU - 1, 2
"A Beginner's Guide to the U.S. Payments System"
"The Changing Meaning of Money"
"Honest Money is the Best Policy"
2. Financial markets, instruments and
institutions
-
Financial intermediation
-
Depository and non-depository institutions
-
Money markets, capital markets, securities markets
-
Financial instrumnets -- stocks, bonds, mortgages, derivatives
Reading
3. Interest Rates
-
Definitions - coupon, yield, duration
-
Real and nominal interest rates
-
Determinants: Supply and Demand for funds
-
Risk and maturity structure
-
Expectations theory of term structure of interest rates
Reading
RSU- 4, 5 and 7
"Assessing Real Interest Rates"
"Do Higher Long-Term Interest Rates Reflect Expected Inflation?"
4. Money and Capital Markets
-
Government securities
-
Corporate bonds and equities
-
Derivatives
-
Foreign exchange markets
Reading -- RSU - 8 to 10
5. Financial intermediation and
the banking business
-
Origins of banks
-
Specialness of banks - What do banks do?
-
Financial contracts and business finance
-
Banking and financial regulation
Reading
6. Money creation and central banking
-
Multiple deposit creation
-
Demand and supply for money and reserves
-
Deposit creation by banks and the role of a central bank
Reading -- RSU - 19
7. Central Banking Structure of
the Federal Reserve
-
Structure of the Federal Reserve
-
Instruments of monetary policy
-
Fed operations and decision making
-
Foreign exchange operations of the Fed
Reading
8. Financial Systems and regulation
-
Regulatory strucuture in U.S.
-
Design of financial systems around the world
-
Changing regulatory structure
Reading -
9. Monetary policy and the macro economy
-
Monetary policy transmission
-
Monetary policy - goals and targets and operating procedures
-
Central bank independence
-
Monetary policy and the Great Depression
-
Government deficits and monetary policy
Reading -
10. Globalization of Financial markets
-
Exchange rate policies and crises
-
Currency Boards
-
EMU
-
Regulating global finance
Readings -
"Can Currency Boards Prevent Devaluations and Financial Meltdowns?"
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