Money,
Banking, and Financial Markets
Financial
markets are markets for money, bonds, stocks and foreign exchange. Financial
institutions – banks, insurance companies, mutual funds – operate in financial markets
transferring funds from lenders to borrowers.
Activities in financial markets have direct effect on personal wealth,
business profits, production of goods and services and the overall health of
our economy. This study explores the
operations of money, foreign exchange, bond and equity markets, and the role of
financial institutions. We will also investigate the changing role of financial
institutions and monetary policy in a modern economy.
Textbook:
Mishkin, The Economics of Money, Banking, and Financial Markets, 8th edition (chapter numbers below follow this edition, 7th edition includes 2 chapters that are web-chapters in 8th edition)
Mishkin
text companion website -web links,
case studies, animated graphs, current articles related to the course content,
web appendices, and multiple choice quizzes that you can send me for extra
credit.
Course outline, homeworks, extra
links
I.
Introduction (class 1)
To review Macroeconomics, use links below course outline
1.
Introducing money, banking, financial markets
2.
Overview of financial system
3.
What is money?
M. Lewis, "The End of the Financial World As We Know It" - NYTimes (free registration)
M. Lewis, "How to Repair a Broken Financial World." -NYTimes
Homework 1
- .doc file
II.
Financial markets (class 2)
4.
Interest rates
5.
Behavior of interest rates
Narrated
Slides, Present Value
Interest Rates: An
Introduction – NY Fed
Discounting Future Income and Present Value –learn to calculate present value
The Internal Rate of Return - tutorial
Perils
of the Internal Rate of Return - tutorial
Animated Graphs – graph numbers are not the same as in the textbook
Present Value by David R. Henderson
Interest by Paul Heyne
Bonds by Clifford W. Smith
When Yield Goes Up, Price Goes Down
·
Appendix to Chapter 5: Models of Asset Pricing
·
Appendix to Chapter 5: Applying the Asset Market Approach
to a Commodity Market: The Case of Gold
· Appendix to Chapter 5: Loanable Funds Framework
Homework 2
- .doc file
6.
The risk and term structure of interest rates (class 3)
7.
The stock market
Corporations by
Robert Hessen
Insider Trading
by David D. Haddock
Junk Bonds by Glenn Yago
Rational
Expectations by Thomas J. Sargent
Stock Prices by
Jeremy J. Siegel
Efficient
Capital Markets by Steven L. Jones and Jeffry M. Netter
Efficient Markets and the Portfolio Theorem
Corporate Debt
by Annette Poulsen
Risk and interest rates tutorial
Risk
MisManagement – NYTimes
Born
to Be a Trader? Fingers Point to Yes - Washingtonpost.com
The Yield Curve as a Leading Indicator ›› - NYFed
Homework 3
- .doc file
III.
Financial
Institutions (class 4)
8.
Economic analysis of financial structure
9.
Banking and management of financial institutions
10.
Banking industry
11.
Banking regulation
U of Toronto
narrated slides on Money and Banking – parts “a” and “b”
www.fdic.gov/regulations/laws/important/index.html
- most important banking regulations, FDIC
Bank Runs by George
G. Kaufman
Fed list of banking
regulations with descriptions
Office of the Comptroller of the
Currency
A Snarl of
Regulation – NYTimes on bank
regulation
The Crash –
link to the story of financial crisis
(Mis)Understanding
a Banking Industry in Transition – Dollars and Sense, 2007
From
Tulips to Mortgage-Backed Securities– Dollars and Sense, 2009
Time for Permanent
Nationalization! –
Dollars and Sense, 2009
Why is the country
facing a financial crisis? – NY Fed education, 2009
The Great Depression
– B.Caplan
What
caused the Depression of the 1930s? –
NY Times article
Why was the Great Depression a disaster waiting to happen? - social studies help site
The Return of Depression
Economics, Krugman, Foreign Affairs 78.1 Jan/Feb 99
http://www.amatecon.com/greatdepression.html - causes and consequenses
Homework 4
- the
longest one of all
IV.
Central banking (class
5)
12.
Structure of the Fed
13.
Multiple deposit creation
14.
Determinants of money supply
15.
Tools of monetary policy
16.
Goals and targets of monetary policy
The Story of Money – from Atlanta Fed
The Federal Reserve System:
Purposes and Functions
Link to Fed 101 – a tutorial on Fed and Money
New York Fed, The Discount Window
New York
Fed, Open Market
Operations
The Story of Money – from Atlanta Fed
Bank Runs by George G. Kaufman
Competing Money Supplies by Lawrence H.
White
Deposit Insurance by George G. Kaufman
Federal Reserve System by Manuel H.
Johnson
Gold Standard by Michael D. Bordo
Money Supply by Anna J. Schwartz
Savings and Loan Crisis by Bert Ely
Amos
web Macro Course –read “Money and Banking“
U of Toronto
narrated slides on Money and Banking – parts “a” and “b”
Narrated
Slides: Monetary Policy
Monetary theory and policy
- a good textbook chapter in .pdf
Monetary Policy
by James Tobin
U.S. Monetary
Policy and Financial Markets -NY Fed education
Charging
Up Your CREDIT CARDS (aka Plastic Money)
NYT
Article Coca
as Money
Web Chapter 1: Nonbank Finance (class 6)
Web Chapter 2: Financial Derivatives
Futures
and Options Markets by Gregory J. Millman
Risk Aversion and Insurance – tutorial
The Real Interest Rate and Annuities
The Economics of Social Security
Asset-Backed
Securities by Phillip L. Zweig
Pensions
by Henry McMillan
2008
Leaves Pensions Underfunded - Washingtonpost.com
V.
International
Finance (class 7)
17.
Foreign exchange market
18.
International financial system
Trading
some ideas on exchange rates
All About…The Foreign Exchange
Market in the United States
- NY Fed education
· Appendix to Chapter 9: Duration Gap Analysis
· Appendix to Chapter 9: Measuring Bank Performance
· Appendix to Chapter 11: Evaluating FDICIA and Other
Proposed Reforms of the Bank Regulatory System
· Appendix to Chapter 13: The Fed's Balance Sheet and the
Monetary Base
· Appendix to Chapter 14: Explaining the Behavior of the Currency Ratio
Review of Macroeconomics:
Circular Flow of Income
- Macroeconomics – 8 min Youtube
Narrated Slides, GDP, Inflation,
Unemployment, Business Cycle
Narrated Slides: Federal Spending
Narrated Slides: Deficits, Surpluses,
National Debt
Narrated Slides: Fiscal Policy
Narrated
Slides: Monetary Policy
Economics 101: Consumer Price Index – 2 min YouTube video
U of Toronto
narrated slides on Money and Banking – parts “a” and “b”
The Roller Coaster Ride
(11:07) – video on instability and business cycle
Gross
Domestic Product by Lincoln Anderson
Business
Cycles by Christina D. Romer
Recessions by
Geoffrey H. Moore
Inflation by David
Ranson
Amos
web Macro Course –read “The Macroeconomy“
Financial Markets Links:
·
Program
Trading by Dean Furbush
·
Takeovers and
Leveraged Buyouts by Gregg A. Jarrell
·
Overview
of Behavioral Finance
· The Department of the Treasury – click on “Education” to read about financial markets
· http://pages.stern.nyu.edu/~adamodar/ - good webcasts here
An Introduction to Investment Theory-
· http://faculty.fuqua.duke.edu/~charvey/Video/Digital_video.htm
· http://giddy.org/ibmfinance/finmat.htm
·
www.federalreserve.gov/releases/
·
www.martincapital.com/main/charts.htm
· www.financialservicefacts.org/financial - financial services fact book, rankings
·
www.economagic.com/ -lots of econ data, charts
·
A Non-Random Walk Down Wall Street. Andrew W. Lo and A. Craig MacKinlay –
eBook
·
Interest-Only
Mortgage Payments and Payment-Option ARM's – NY Fed
·
Global Economic Indicators – NY
Fed, by country
·
Current Issues in
Economics and Finance – NY Fed