Money and Financial Institutions Economics 328

Spring 1997

Instructor: Jean Shackelford (
Office Hours: Coleman 162 ; MW 1-2. Others by appointment.

R. Glenn Hubbard. Money and the Financial System and the Economy. 2nd edition, New York: Addison Wesley, 1997.

Burton Malkiel. A Random Walk Down Wall Street. 6th edition, New York: W.W. Norton & Co., 1996.

Please subscribe and read weekday editions of the New York Times or the Wall Street Journal.


ASSIGNMENTS: January | February | March | April

Jan. 22 Introduction to the course--goals, objectives, assignments, grading
Jan. 27 Chapters 1 & 2-Money, the Financial System and the Payments System
Portfolio Assignment (part 1--Hollywood Stock Exchange (optional))
Jan. 29 Chapter 3 - Overview of the Financial System
Interest Rates
Feb. 3 Chapter 4 - Interest Rates and Rates of Return
Feb. 5 Chapter 4 continued--Portfolio Assignment -- trial stocks
Feb. 7 A Random Walk Down Wall Street (Part 1)
Feb. 10 A Random Walk Down Wall Street (Part 2)
Feb. 12 A Random Walk Down Wall Street (Part 3)
Feb. 14 A Random Walk Down Wall Street (Part 3 continued) & Chapter 5
Feb. 17 Continuing to walk randomly and Portfolio Assignment (part 2)
Feb. 19 Chapter 6 - Determining Market Interest Rates
Feb. 21 Chapter 6 continued
Feb. 24 Chapter 6 continued
Feb. 26 Chapter 7 - Risk Structure of Interest Rates
Feb. 28 Chapter 7 - Term Structure of Interest Rates
March 3 Examination 1
Financial Markets

March 5 Chapter 8 - Foreign Exchange Market and Exchange Rates
March 7 Chapter 9- Derivatives (options, futures and the like)
March 10 Chapter 10 - Information and Market Efficiency
March 12 Chapter 11- Reducing Transactions and Information Costs
March 14-23 Spring Break
Financial Institutions

March 24 Chapter 12 - What Financial Institutions Do
March 26 Chapter 12 continued
March 28 Chapter 13 - The Business of Banking
March 31 Chapter 13 continued
April 2 Chapter 14 - The Banking Industry
April 4 Chapter 14 continued
April 7 Chapter 15 - Banking Regulation: Crisis and Response
April 9 Chapter 15 continued
April 11 Examination 2
April 14 Chapter 16 Banking in the International Economy
April 16 Chapter 16 continued
The Money Supply Process and Monetary Policy
April 18 - Chapter 17 - The Fed and the Money Supply
April 21 Chapter 19 - The Organization of the Federal Reserve System
April 23 Chapter 20 - Monetary Policy Tools
April 25 Chapter 21 - The Conduct of Monetary Policy
April 28 Chapter 21 continued
April 30 Chapter 22 - The International Financial System and Monetary Policy
Money and the Macroeconomy
May 2 Chapter 27 - Information Problems and Monetary Policy
May 5 Chapter 28 - Inflation: Causes and Consequences
May Final Examination

Class Preparation:

Class periods will be devoted to presentation and informal discussion of the assigned readings.


The following criteria will be used for course evaluation:

Class Discussion/Participation (10%)

Includes daily preparation of assigned materials and reflection about material in reading assignments and participation in class discussions. (Make sure that you are have scanned the Wall Street Journal or New York Times for relevant articles.)

Written Assignments
Journal (10%)

Please keep a journal in which you write about the financial events which occur during the semester. Occasionally you will be asked to prepare a short written answer about an assigned topic--or to write a summary of a web-based project. While this is not a W course your journal entries should still demonstrate all aspects of the writing process, including: thinking through the issues presented, stating or summarizing the issue clearly and revising if necessary. Please hand in your journal three times during the semester, including the last day of class (That's the third time). (Please space the timing in which you hand in your journal. Do not hand in your journal in fewer than three week intervals.

Portfolio Assignment (10%)

Early in the semester you will be asked to select a financial portfolio which you will track through the semester. You will not only to watch and record the performance of your portfolio, but indicate individual economic or political factors might be responsible for changes in the price of each asset during the course of the semester.
Examinations: (70%)

There will be three examinations during the course of the semester, including a comprehensive final examination.

If you would like to discuss your written work or class participation, please feel free to stop in my office, (Coleman A162) to discuss your progress.

Attendance: (standards for your class participation grade)

Please arrange your appointments for job interviews or participation in sports events at other times than class meetings. Since participation is a large part of evaluation, class absences will be reflected in your grade for the course.
In addition to the above, you may use the following as an attendance guide which will be part of my assessing "Class Discussion":

4.0 Perfect attendance. Always well prepared and contributes actively in most classes.
3.0 90% attendance. Almost always well prepared and usually contributes actively.
2.0 80% attendance. Usually prepared and contributes actively to about half of the classes.
1.0 At least 50% attendance. Only prepared about half of the time. Contributes actively about 20 % of the time.
0.0 Attends occasionally. Poor preparation.