ChrisBALL

Money and Banking

Assoc. Prof. Chris Ball

Economics Department

Email:

Office phone: +1 203 582 8745

Office Location: 4th Floor Rocky Top Student Center

QU Course Number: EC 341

Days: Tuesdays and Thursdays

Time:  3:30 - 4:45 PM

Location:  CCE 210

Office Hours: TBD and As Needed

QU Covid Message: play the linked video, at the beginning of EACH of your courses

COURSE OUTLINE

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• Syllabus: download

• Required Pearson MyLab access: download instructions

• Required Textbook (or e-book access through MyLab): Mishkin, The Economics of Money, Banking and Financial Markets, 12th Ed, Pearson.

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Student Presentation Materials (Info and Schedules)

• Data Presentations: download

• Teaching Presentations: download

• All the book's data problems (reference): download

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Section 1: Introduction and Review

• Introduction and Overview of topics (Chap 1, 2 and 3)

• Understanding modern central banking

  • Why do we care: Economics, Finance, Politics

  • 2 Aspects: (1) Macro Analysis (New Keynesian Models) and (2) Financial System Management

• Basic Economic Review: Micro for Macro

  • Building supply and demand models (intuitive building blocks, inverse demand & supply, equilibrium and time paths)

    • NOTES: Math Review and Building S&D Model Basics (download)

  • What’s the point? Frameworks to analyze, understand and make predictions

  • Equilibrium: market clearing with slow price adjustment vs slow quantity adjustment

  • 2 Markets and the Law of One Price

Section 2: Interest Rates and Related Topics

Note: We covered bond markets, then skipped the money market, covered the terms structure of interest rates, then returned to close with the money market

• General Topics

  • NOTES: Geometric Series

  • Discounting the Future

  • Trading Over Time: Applying the Law of One Price and Discounting

  • Fundamental Result: Asset prices and interest rates are inversely related.

• Some Financial System Institutional Details (Chap 2 & 3)

• Interest Rate Basics (Chap 4)

• Building (Bond) Markets and Interest Rates (Chap 5)​​

  • NOTES: My lecture notes for the basics of Chap 5.​

  • NOTES: My lecture notes on solving Bond and Money Markets simultaneously.

• The Term Structure of Interest Rates (Chap 6)

  • NOTES: My lecture notes.

  • READING: List of Countries By Credit Rating Agencies (wikipedia)​

  • READING: My 3 Articles from 2019 on Interpreting US Yield Curve Inversion - Part 1, Part 2, and Part 3

Section 3: Asymmetric Information and Its Implications

• Basic Concepts and Analytical Frameworks

  • NOTES: Handwritten Notes on Asymmetric Information and Adverse Selection

  • NOTES: Handwritten Notes on Asymmetric Info and Moral Hazard

  • NOTES: Handwritten Notes on 1st Best vs 2nd Best

  • NOTES: Handwritten Notes on Principle-Agent (very brief)

  • Transaction Costs and Institutional Evolution

• Basics of Banking (Chap 9)

  • NOTES: Handwritten Notes on Chapter 8

  • NOTES: Handwritten Notes on Chapter 9

  • Reading: Bitcoin original paper

• Dynamics of Financial Crises (Chap 12)

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Section 4: Monetary Basics and Central Banks

• Review the basic money supply process, focus on T-Accounts (Chap 14)

• The market for reserves (Chap 15)

  • CRAZY! FED Board of Governors 2020 Announcement that Required Reserves are ZERO.​  "In January 2019, the FOMC announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework. 
    In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26 (2020), the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses."

• Conventional tools of monetary policy (Chap 15)

  • HAND WRITTEN NOTES Chap 15 The Tools of Monetary Policy inlcuding Ample Reserves

    • These notes are based on Chapter 15 of Mishkin's book and the FED Paper below.  You should really read both the textbook and the Fed Paper.

    • READING! FED Board of Gov Policy Paper (February 2020): The Fed's "Ample-Reserves" Approach to Implementing Monetary Policy​

• HAND WRITTEN NOTES ​Taylor Rules (Chap 16 and more)

• Quick intro to Monetary Policy Issues in an Open Economy (own notes) (SKIP Chap 17 & 18)

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TYPED NOTES: Review of AS-AD Basic

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Section 5: New Keynesian AS-AD and Policy Topics

• MV = Py in the short and long run (Chap 19)

• Liquidity Preference theory (Chap 19)

• 3 Building blocks of NK AS-AD

1. Aggregate Demand and The IS Curve (Chap 20)

2. Aggregate Demand and Monetary Policy (Chap 21)

3. Aggregate Supply: Combining Phillips and Okun (Chap 22)

• Analysis and Policy Challenges (Chap 22 and Chap 23)

• Forward Guidance and Expectations (Chap 24)

• Transmission Mechanisms (Chap 25)