ECON 310

Money and Banking

University of Michigan - Ann Arbor

The role of money, banking, and finance in the economy. At the macroeconomic level, we study how monetary policy influences interest rates, prices, and overall economic activity. For textbook information, please visit the?ECON Textbook Information Website. Information will be posted for each class as soon as it is available.
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24HR Notes for ECON 310

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Maciej Dudek

ECON 310 Syllabus for Maciej Dudek — Fall 2018

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University of Michigan - Fall 2018
Econ 310: Money and Banking
Location: 1400 CHEM
Class Time: Lecture - MW - 11:30AM-1:00PM
Course Overview
Our focus in this class will be primarily on the structure, organization, and functioning of financial
markets in facilitating inter-temporal trade, and the role money plays in both intra- and inter-
temporal trade. Millions of participants in financial markets daily seek to borrow (trading future
consumption for current consumption) and lend (trading current consumption for future
consumption), and do so primarily through a host of financial intermediaries (including banks),
which reduce the transactions costs of doing so. As we trade into an uncertain future, there is
attendant risk and uncertainty that must be confronted by parties on all sides of such trades, and
this affects not only the characteristics of the instruments being traded but also the way roles of
financial intermediaries have evolved through time.
We will also consider the potential strengths and weaknesses of monetary policy, which impacts
financial markets first before we experience spillover effects in the real sectors of our economy:
production and sale of goods and services, accumulation of capital and economic growth, and
employment, etc.
Recommended Text
Money, Banking, and the Financial System, Third Edition, R. Glenn Hubbard, and Anthony
Patrick O’Brien, Pearson, ISBN 10: 0-13-452406-3, ISBN 13: 978-0-13-452406-1.
Additional Reading
The Economics of Money, Banking and Financial Markets, Eleventh Edition, Frederic S. Mishkin,
Pearson, ISBN 13: 9780133836790.
Course Objectives
Upon completion of this course students will
·possess understanding of the financial system, its institutions and roles
·understand the role of financial intermediaries
·be familiar with financial instruments
·understand the role, objectives, and tools of monetary policy
·understand the links between the real and financial sectors
Assessment
There will be two midterm exams during the semester, plus a cumulative exam at the end of the
course. In addition, students will be expected to complete homework assignments.
The grade in the course will be based on your performance on the three exams and the
homework assignments. In particular, the following weights will be used
[FALL 2018]
Page 1
Instructor:
Maciej Dudek
Phone:
734 762 9238
Email:
mkdudek@umich.edu
Office Location: 213
Lorch Hall
Office Hours:
T: 10AM-11AM
·Homework Assignments – 20%
·Midterm Exam #1 - 25%
·Midterm Exam #2 - 25%
·Final Exam – 30%.
Please note that you are not graded on attendance, however, being present in class is
strongly recommended. Furthermore, I will take attendance at each lecture and I will treat your
attendance record as if it were extra credit work (worth up to 10% of your final grade.)
In addition to counting 30% toward the final grade, the final exam score will be
substituted for the lowest midterm exam score as long as the lowest midterm exam score is lower
than the final exam score.
Furthermore, the lowest individual homework assignment score will be ignored.
Final grades will be set according to the following criteria:
A - 90%+
B - [80%,90%)
C - [70%,80%)
D - [60%,70%)
F - less than 60%.
Academic Integrity
Students are expected to behave in line with the standards of the academic community. Please
make sure that you never take advantage of your fellow students.
Special Accommodations
We follow the standard University Guidelines. Students in need of special academic
accommodations should either contact me personally or contact directly the relevant university
center to arrange appropriate accommodations.
Learning Resources
This semester we will use an online software package, MyEconLab. Please see instructions on
Canvas on MyEconLab.
Course Schedule (Tentative) - Please regularly visit the course website on Canvas for updates and
additional course materials.
Week
Subject
Homework Assignments
1
Money and the Financial System –
Introduction
[WINTER 2018]
Page 2
2
Money and the Payment System
HWK #1 Due
3
Interest Rates and Rates of Return
HWK #2 Due
4
Interest Rate Determination
HWK #3 Due
5
The Risk Structure and the Term
Structure of the Interest Rates
HWK #4 Due
6
The Stock Market, Information, and
Financial Market Efficiency
Midterm #1, October 10, 2018
7
Derivatives and Derivative Markets,
Foreign Exchange Markets
HWK #5 Due
8
Transaction Costs, Asymmetric
Information, and the Structure of the
Financial System
HWK #6 Due
9
The Economics of Banking, Beyond
Commercial Banks: Shadow Banks and
Nonbank Financial Institutions
HWK #7 Due
10
Financial Crises and Financial
Regulation
HWK #8 Due
11
The Federal Reserve and Central
Banking
Midterm #2, November 14,
2018
12
The Federal Reserve’s Balance Sheet
and the Money Supply Process,
Monetary Policy
HWK #9 Due
13
The International Financial System and
Monetary Policy
HWK #10 Due
14
Monetary Theory I: The Aggregate
Demand and Aggregate Supply Model
HWK #11 Due
15
Monetary Theory II: The IS-MP Model
Exam #3, December 11, 2018
Exam Schedule
Week
Subject
6 – October 10, 2018
Midterm #1
11 – November 11, 2018
Midterm #2
15 - December 11, 2018
Exam #3
[FALL 2018]
Page 3

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