Economics Department
Course Syllabus

Course title: Money and Banking (50:220, 301:90, Index number 11845 (ONLINE COURSE)    

Prerequisites:  Principles of Macroeconomics and Microeconomics 

Day Time Place: ONLINE

Instructor: Robert Vaden  

Phone: 856-582-9325       

Email: robert.vaden@rutgers.edu

Catalog Description: Theories of money and their applications; structure and historical development of U.S. monetary and banking institutions; current problems of money management.    

Course Overview: The course will cover the structure and performance of the nation’s financial system, the evolving role of the Federal Reserve, and the role of money and interest rates in today’s economy. Issues related to the definition and measurement of the nation’s money supply will be discussed as will be the importance of an efficient and sound financial system. The changing structure and regulation of the nation’s financial system as well as the challenges faced by the financial system will also be covered.  Special emphasis will be placed on the more recent performance of the nation’s financial system in the period leading up to the “Great” recession and in the subsequent recovery which is still continuing.   

Special emphasis will be placed on monetary policy as a tool to  manage the economy. In this context, we will extensively cover many issues related to the Federal Reserve and the  Congressional mandate which defines the responsibilities of the Federal Reserve. We will also discuss the key economic and political challenges currently facing the institution today.           

Required Text: The Economics of Money, Banking & Financial Markets by Frederic Mishkin. Pearson, Eleventh Edition.

Recommended Reading: The student should supplement the text with readings from the Wall Street Journal and the The Economists (a British weekly) as time permits. The Federal Reserve’s minutes from the meetings of the Federal Open Market Committee (FOMC) are also informative. Links to key websites of the Federal Reserve will be provided.         

Federal Reserve Bank of Philadelphia: The Federal Reserve Bank of Philadelphia has an exhibition called “Money in Motion”. The exhibition is interactive and has much information that is useful in a money and banking Course. The exhibition is free, open to the public, and highly recommended. 

Course Objectives:

  •  Introduce the student to the role of money, the financial system, interest rates, and the central bank in a modern economy.
  • Improve the student’s knowledge of the American financial system and its evolution, its recent performance, and the challenges it faces.
  • Provide the student with an understanding of the “Great Depression”, its causes, and the impact that it has had on the American financial system and economy to this day.
  • Give the student a good understanding of the causes and impact of the recent recession and the role of the financial system in both the downturn and the subsequent recovery.
  • Make the student aware of the role of the Federal Reserve Board, its organization structure, its economic and political challenges, the tools of monetary policy and its performance over the last several years.
  • Make the student aware of key official economic data sources on variables such as the money supply, inflation, consumer and mortgage debt outstanding,
  • Provide the student with a detailed knowledge of issues related to the measurement and longer term trends in unemployment and inflation.

Grades:  There will be a mid-term and a final exam. In addition, there will be roughly 10 unannounced class exercises that will take the form of multiple choice questions, definitions, or brief essay or discussion questions.  The average grade of the class exercises will be calculated and these exercises, collectively, will count as one exam.

Your class grade will be calculated as the average of the mid-term exam, the final exam, and the class exercises.   Note that as the semester progresses, any exam or exercise questions may be taken from any material covered to date.  In other words, all exercises and exams are cumulative.   

Final grades will be assigned as follows: 90+=A; 84-89=B+; 78-83=B; 72-77=C+; 66-71=C; 60-65=D; 59 or less= F;

Office Hours: To be determined. Students are strongly encouraged to use the office hours as a way to meet the instructor and get clarification and help with problem areas in the course. Office hours are one way to work around the lack of personal contact inherent in an online course.    

Course Outline

The topics to be covered are listed below. Topics and dates are subject to change as the semester progresses.  

Week starting

Topic

Sources

Week 1

Week of Sept. 5

Introduction

Knowledge Assessment Exercise

An introduction to Money and Banking 

Why Study Money, Banking, and the Financial System

Appendix to chapter 1

 

Attachment

Attachment

Mishkin, chapter 1

Mishkin. Chapter 1

Weeks 2 and 3

Weeks of

Sept. 12 and Sept. 19.    

Overview of the Financial System

Note:  This is a very detailed chapter with a significant amount of important information. The chapter will require significant time.  For this reason, we will spend two weeks on this chapter and the supplement. 

 

The Shadow Banking System  

 

Mishkin  chapter 2

Financial Services Inquiry

Report (chapter 2)

 

Week 4

Week of Sept. 26  

What is Money

Mishkin, chapter 3

Week 5

Week of Oct. 3

Interest Rates

Understanding Interest Rates

 

Risk and Term Structure of Interest Rates

Attachment 

Mishkin, chapter 4,

 pages 66-70, 81-84

Mishkin, chapter 6

Week 6

Week of Oct. 10

An Economic Analysis of Financial Structure 

Mishkin, Chapter 8

Emphasis will be on pages 162-167. 

Week 7

Week of

Oct. 17

Financial Crisis  (the Great Depression and the Great Recession)

The Great Recession

Mishkin, Chapter 12

Attachment

Week 8

Week of Oct. 24 

    EXAMINATION I

 

Week 9  

Week of Oct. 31

Financial Crisis, continued  (Great Depression)

Financial Crisis Inquiry Report 

Website will be provided

Week 10

Week of Nov. 7

Banking Industry:  Structure and Competition

Note:  This is a detailed chapter and contains much information that is critical to understanding the course material. 

Mishkin, chapter 11

Week 11  

Week of Nov. 14

Central Banking and the Conduct of Monetary Policy   

Note:  Key chapter: Introduces the Federal Reserve and its organizational structure. 

Mishkin, chapter 13

Week 12   

Week of Nov. 21

 

The Money Supply Process

Press Release: Federal Open Market Committee 

THANKSGIVING WEEK

Mishkin, chapter 14

website

Week 13

Week of Nov. 28

 

Goals of Monetary Policy

Unemployment and Inflation

Wall Street Reform and Consumer Protection Act of 2010

Attachment

Week 14

Week of Dec. 5

Tools of Monetary Policy 

This is a critical chapter.  Pages 341 through 354 cover the conventional or the traditional tools of monetary policy. The remainder of the chapter covers the non-traditional tools of monetary policy which were used due to the ineffectiveness of the traditional tools in combating the “Great Recession”.  

 

 

 

Week 15

Week of Dec. 12

Note:  Regular classes end on Wednesday, December 14

Course review/  Answer student Questions/ Prepare for Final Exam 

 

FINAL EXAM DATE TO BE DETERMINED.