Introduction to Money and Banking
Semester: Spring 2012
Instructor: George Berger
Office: 120 Biddle
Phone: 269-2982/2990 or 2991
Office Hours: MWF 2-3, 4-6, TH 2-3:30, 5-6, or by appointment.
I. TEXT: George Berger, Supplementary Readings, 2012. Parts 1 and 2
II. ORGANIZATION OF THE COURSE
1. David Glasner,
"The Evolution of Money and Banking," Free Banking and Monetary
B. Interest Rates
1. Meir Kohn, "Inflation: Its Causes and
Consequences," Money, Banking, and Financial Markets, The Dryden Press, 1991, pp. 730-40.
2. David Beim and Charles Calomiris, "Causes and Cures," Emerging Financial Markets, McGraw-Hill, Irwin, 2001, pp. 234-40.
3. Clifford Thies, "The Interest in Indexation," Durrell Journal of Money and Banking, December 1992, pp. 32-37.
Jeffrey Wrase, "Inflation-Indexed Bonds: How Do
They Work?" Business Review, Federal Reserve Bank of
1 (Definitions, Supplementary
C. Financial Institutions and Their Regulation
SUPPLEMENTARY READINGS (116)
1. Mitchell Berlin, “That Thing That Venture Capitalists Do,” Business
Review, Federal Reserve Bank of Philadelphia, January/February 1998, pp. 15-25. EXTRA CREDIT
2. Catherine England, "Agency Costs and Unregulated Banks: Could Depositors Protect Themselves?" Cato Journal, 7:3 (Winter 1988), pp. 771-97.
3. Charles Calomiris, "Runs on Banks and the Lessons of the Great Depression," Regulation, 22:1, pp. 4-7.
4. Jith Jayaratne and Philip Strahan, "The Benefits of Branching Deregulation," Regulation, 22:1 1999, pp. 8-16
5. William Shughart II, "A Public Choice Perspective on the Banking Act of 1933," The Financial Services Revolution, ed. by Catherine England and Thomas Huertas, Kluwer Academic Publishers, 1988, pp. 87-104.
Loretta Mester, "Repealing Glass-Steagall: The Past Points to the Future," Business Review, Federal Reserve Bank
7. Nicholas Economides, R. Glenn Hubbard, and Darius Palia, "Federal Deposit Insurance: Economic Efficiency or Politics?" Regulation, 22:3, pp. 15-17.
8. Catherine England, "The Savings and Loan Debacle," Critical Review, 7:2-3 (Spring/Summer 1993), pp. 307-19.
9. George G Kaufman, “The
10. Juliusz Jableckiand Mateusz Machaj, “The Regulated Meltdown of 2008,” Critical Review, 21:2-3, 2009, pp. 300-25.
11. Mark Perry, “Due North: Canada’s Marvelous Mortgage and Banking System,” The American.Com, February 26, 2012, pp. 6.
EXAM 2 (Definitions and Supplementary
D. Central Banking
SUPPLEMENTARY READINGS (12)
1. Larry H. White, “The Financial Bailouts: ‘See the Needle and the Damage Done’” The Freeman, Vol. 59:2, March 2009, pp. 16-22.
2. David Howden, “Can the Fed Successfully Exit?” Mises Daily Commentary, August 3, 2010, 5 pp.
E. A Critique of Central Banking
SUPPLEMENTARY READINGS (32)
1. Meir Kohn, "Inflation: Its Causes and Consequences," Money, Banking, and Financial Markets, The Dryden Press, 1991, pp. 715-20.
2. Roger W. Garrison, “The Greenspan Fed in Perspective,” The Freeman, Vol. 56:5, June 2006, pp. 12-17.
3. Larry H. White, "Free Banking as an
Alternative Monetary System," In Competition and Currency: Essays on
Free Banking and Money, Larry H. White, NYU Press, 1989, pp. 13-21.
4. David Glasner:
"Why We Need A New Monetary Regime," Free Banking and Monetary
F. The Free Banking
1. Larry H. White and George Selgin, "The Evolution of a Free Banking System," In Competition and Currency: Essays in Free Banking and Money, NYU Press, 1989, pp. 218-21, 224-33.
2. Kevin Dowd, "Automatic Stabilizing Mechanisms Under Free Banking," Laissez Faire Banking, Routledge, 1993, pp. 25-40.
3. David Glasner, "Free Banking and Economic Development," The Freeman, July 1995, pp. 461-66.
4. Richard Timberlake, "Free Market Money in Coal-Mining Communities," The Freeman, October 1989, pp. 398-405.
5. Randall Kroszner, “Free Banking: the Scottish Experience as a Model for Emerging Economies,” The World Bank Policy Research Department, November 1995, pp. 1-16.
EXAM 3 (Definition, Supplementary
III. COURSE POLICIES
1. The course grade will be based on a total point score of 300 points with each exam counting 100 points. Although I cannot specify how many points are needed for an A, how many for a B, etc., at this time, I will indicate grade ranges after each exam.
2. +'s and -'s will be used in final grades where appropriate.
3. Students are responsible for knowing the list of vocabulary words which will be 30% of each exam. This vocabulary list will be the basis for matching portion of the exam.
4. All exams will be given in two stages. The first stage will consist of definitions which must be answered without the use of notecards. The second stage will consist of essay questions which can be answered with the aid of an unlimited number of 3"x5" notecards. Exam questions will be based on the homework problems and the relevant supplementary readings. The exam questions will be different from the homework problems but if you have worked on the latter, you should be able to answer the former. I will include some extra credit questions as part of each exam. This is the only place that extra credit can be done.
NOTE: THESE NOTECARDS MUST BE HANDWRITTEN. I WILL REQUIRE ALL STUDENTS TO TURN IN THEIR NOTECARDS TO ME AFTER THE EXAM. THAT MEANS YOUR NAME MUST APPEAR ON EACH NOTECARD YOU USE. IF I DISCOVER THAT SOMEONE HAS USED XEROXED NOTECARDS THAT PERSON WILL RECEIVE A ZERO ON THE EXAM.
5. Exam dates will be:
Exam 1–February 7 (approximately)
Exam 2–March 22 (approximately)
Exam 3 – Wed Apr 25 @ 3-5PM
Please note that you must take Exam 3 when scheduled. Exceptions will be allowed only if students provide evidence of one other exam on the scheduled date.
6. Exams are NOT cumulative but cover only the material after the previous exam.
7. Your grade can be calculated as follows: (1) Assume you earned a 73 on the first exam. Assume that scores of 70-79 are Cs and scores of 80-89 are Bs. (2) Assume you earned an 83 on the second exam. Assume that scores of 80-89 are Bs. Your total number of points earned after the second exam add to 156. What is your letter grade? Add together the minimum scores for a B which in this case is 160 points. Since your point total is less than the minimum score to earn a B, you have a C+ in the course after the second exam. (NOTE: The ranges used in this example are not necessarily the ranges that I will use during the course of the semester.)
8. Make-up exam policy.
a. In the event of a prolonged absence (more than a single class or single day), students must immediately contact the Office of the Assistant to the Vice President of Academic Affairs, Blackington 248, (814-269-2078) to be excused from classes. All other absences on the test date must be accompanied by a doctor’s excuse. Students who do either of these things will be able to take a make-up exam if the excused absence occurs on an exam date.
b. If the student does neither of these things the instructor may allow a make-up exam with a penalty to be determined by the instructor or may assign the student a zero depending on the nature of the excuse. Students should note that the exams increase in difficulty throughout the course.
9. Answers to the homework problems are available online.
10. There is a reward for class participation, albeit an informal one. If your total point score at the end of the semester is close to a grade borderline and you have demonstrated (a) knowledge of the text and readings and/or (b) understanding of the economic principles discussed in the text and readings, this should be sufficient to push you over the grade borderline.
11. Class attendance is MANDATORY. PLEASE NOTE: Students will be allowed 3 unexcused absences during the course of the semester. Any absences in excess of these three will be penalized by subtracting three points from your total score at the end of the semester for each absence in excess of the number allowed. (Example: If a student missed 5 classes in total I would subtract 6 points from your total score.)
12. Please note that I will take attendance at every class meeting.
13. READING SCHEDULE
Week 02: Jan 10-12-Glasner
Week 03: Jan 17-19- Kohn; Beim and Calomiris
Week 04: Jan 24-26-Thies; Wrase
Week 05: Jan 31-Feb 02-
Week 06: Feb 07-09-Exam 1
Week 07: Feb 14-16-England; Calomiris
Week 08: Feb 21-23-Jayaratne and Strahan; Shughart; Mester
Week 09: Feb 28-Mar 01-Economides; England; Kaufman
Week 10: Mar 13-15-Jablecki and Machaj; and Perry
Week 11: Mar 20-22-Exam 2
Week 12: Mar 27-29-White; Howden; Kohn
Week 13: Apr 03-05-Garrison; White: Glasner
Week 14: Apr 10-12-White and Selgin; Dowd
Week 15: Apr 17-19-Glasner; Timberlake; Kroszner
14. QUIZ SCHEDULE: There will be 11 quizzes given on Thursday on the following dates covering the material listed in the syllabus by author. You may drop one of the 11 quizzes.
Week 03: Jan 19-Glasner
Week 04: Jan 26- Kohn;Beim and Calomiris
Week 05: Feb 02-Thies and Wrase
Week 06: Feb 07-Exam 1
Week 07: Feb 16-England; Calomiris
Week 08: Feb 23-Jayaratne and Strahan; Shughart
Week 09: Mar 01-Mester; Economides
Week 10: Mar 15-England; Kaufman
Week 11: Mar 22-Exam 2
Week 12: Mar 29-White; Howden
Week 13: Apr 05-Kohn; Garrison
Week 14: Apr 12-White; Glasner
Week 15: Apr 19-White and Selgin; Dowd
15. Please note that the customary rules of etiquette in the workplace apply in the classroom. Two points are of particular importance here:
a. I CONSIDER TEXTING IN CLASS RUDE AND DISTRACTING. THEREFORE IF I EVEN SEE A CELL PHONE DURING CLASS I WILL TAKE THAT PERSON’S CELL PHONE AND PUT IT ON THE PODIUM ( IT MAY BE RECLAIMED AFTER CLASS). FOR EVERY CLASS AFTER THIS OCCURS, THIS PERSON MUST PUT HIS/HER CELL PHONE ON THE PODIUM BEFORE CLASS BEGINS. IF THIS PARTICULAR PERSON IS LATE, HE/SHE MUST PUT THEIR CELL PHONE ON THE PODIUM BEFORE TAKING A SEAT IN THE BACK OF THE CLASS.
b. IN THE PAST STUDENTS IN MY CLASS HAVE OFTEN LEFT DURING CLASS (TO GO TO THE BATHROOM, TO TAKE A PHONE CALL, WHATEVER) AND RETURNED SHORTLY. I ALSO CONSIDER THIS RUDE AND DISTRACTING. SO THIS BEHAVIOR MUST STOP. IF ANYONE LEAVES IN THE MIDDLE OF CLASS: (i) I WILL MARK YOU ABSENT AND (ii) ASK THAT YOU NOT COME BACK FOR THE REMAINDER OF THE CLASS. IF YOU ARE ILL BY ALL MEANS LEAVE CLASS IF YOU NEED TO.
16. Anyone caught cheating on any exam gets a zero. This will make passing the course very difficult.
17. FYI: DROP DEADLINE IS MARCH 2.
18. If you have a disability for which you are or may be requesting an accommodation, you are encouraged to contact both your instructor and the Office of Health & Wellness (OHW), G-10 Student Union Building, (814) 269-7119 to schedule an appointment as early as possible in the term. OHW will verify your disability and determine reasonable accommodations for this course.