The Past Class Weekly Schedule

                  Week 9



February 25, 2013:  Chapter 22 - Aggregate Demand and Supply (continued)



• Review of ISLM
• Chapter 22:  Aggregate Demand and Supply Analysis (Revisited)
• AD: Two Theories One Curve: Quantity of Money Approach
• Aggregate Supply: Long and Short-Run
  • Shifts in Labor Market tightness, the Expected Price Level, Wage push, and Production Costs
  • Long Run Dynamics
  • Demand Shocks
  • Supply Shocks
• Miskin Chapter 22 PPT


• Chapter 23:  Transmission Mechanisms of Monetary Policy: The Evidence
• Transmisttion Mechanisms of Monetary Policy
  • The Evidence
• Lessons for Monetary Policy
  • 4 Lessons
• Miskin Chapter 23 PPT



February 27, 2013:  Chapter 23 - Transmission Mechanisms of Monetary Policy: The Evidence (Continued)



• Chapter 23:  Transmission Mechanisms (Continued)
• The Evidence and 4 Lessons
• Miskin Chapter 23 PPT


• Chapter 24:  Money and Inflation
• Evidence from Hyperinflation
• The Meaning of Inflation
• Views of Hyperinflation
  • Monetary Policy?
  • Fiscal Polciy?
• Miskin Chapter 24 PPT

                  Week 8



January 15, 2013:  Chapter 20 - The ISLM Model (continued)



• Review the Midterm Exam
• Chapter 20:  The ISLM Model (Continued)
• The IS Curve (Goods Market)
  • Iterest Rates and Planned Investment Spending
  • Interest Rates and Net Exports
  • Deriving the IS
• The LM Curve (Money Market)
  • Iterest Rates and Planned Investment Spending
  • Interest Rates and Net Exports
  • Deriving the LM
• Money Supply and Demand
• Changes in the level of Income (Real GDP)
• Problem Set #5: The Goods Market, IS Curve
  
• Chapter 21:  Monetary and Fiscal Policy in the ISLM Model
• Factors that Cause the IS to Shift
  • Autonomous Consumption
  • Autonomous Investment (not affected by the interest rate)
• Government Spending
• Taxes
• Net Exports (unrelated to the interest rate)
• Factors that Cause the LM to Shift
  • The Money Supply
  • The Money Demand autonomous changes
• Miskin Chapter 21 PPT



January 17, 2013:  Chapter 21 - Monetary and Fiscal Policy in the ISLM Model (Continued)



• Chapter 21:  Policy in the ISLM Model (Continued)
• Response to a Change in Monetary Policy
• Response to a Change in Fiscal Policy
• Effectiveness of Monetary versus Fiscal Policy
• Targeting Money Supply versus Interest Rates
• ISLM in the Long-Run
• Miskin Chapter 21 PPT


• Chapter 22:  Aggregate Demand and Supply Analysis
• AD: Two Theories One Curve: Quantity of Money Approach
• Aggregate Supply: Long and Short-Run
• Shifts
• Demand Shocks
• Supply Shocks
• Miskin Chapter 22 PPT
• Problem Set #6: The ISLM Model

                  Week 7



January 8, 2013:  Chapter 19 - The Demand for Money



• Chapter 18:  Intervention in the Foreign Exchange Market
• Foreign Exchange Intervention and the Money Supply
  • International Reserves
  • Buying and Selling Foreign Assets
  • Unsterilized Intervention
  • Sterilized Intervention
  • Intervention in a Fixed Exchange Rate Regime, pp. 467-470 (Application to China)
• Quiz #13: Foreign Exchange Intervention
  
• Chapter 19:  The Demand for Money
• Equation of Exchange to the Quantity Theory
  • Irving Fisher
  • Cambridge Equation
• John Maynard Keynes' Demand for Money 
  • The Transactions Motive
  • The Precautionary Motive
  • The Speculative Motive
• Miskin Chapter 18 PPT
• Miskin Chapter 19 PPT



January 10, 2013:  Chapter 19 - The Demand for Money (Continued)



• Chapter 19:  The Demand for Money (Continued)
• The Keynesian Money Demand Function
• The Baumol-Tobin Model
• Milton Friedman's Demand for Money and the Permanent Income Hypothesis
• Friedman and Keynes, The Difference
• Empirical Evidence
• Miskin Chapter 19 PPT


• Chapter 20:  The ISLM Model
• Aggregate Demand = C + I + G + NX
• The Consumption Function, Disposable Income, MPC, Personal Savings
• Investment, planned and unplanned
• Government Spending and Taxation Policies
• The Goods Market (IS or Investment-Saving)
• Miskin Chapter 20 PPT
• Problem Set #4: Keynesian Cross Algebra

                    Week 6
  
  

January 1, 2013:  Yuan Dan - New Years Day Holiday





December 31, 2012:  Chapter 16 - What Should Central Banks Do?



• REVIEW for the TEST!
• Should Price Stability be the Primary Goal of Monetary Policy?
  • Short-run versus the long-run
  • Hierarchical Versus Dual Mandates
  • Primary long-run goal
  • 3 Types of Targeting
• Taylor Rule, NAIRU and the Phillips Curve
Core Inflation Chained Dollars BEA Personal Income PDF
• Articles Presented in Class from Professor Paul Krugman's Blog:
  • The Madness of the Inflation Hawks
  • No Exit
  • When the Fed should raise rates
• Miskin Chapter 16 PPT
• Andrew's Day 12 PPT - Quiz 12 and Taylor Rule



January 7, 2013:  Midterm Exam, 18:00 - 19:30

                  Week 5



December 25, 2012:  Chapter 15 - The Tools of the Federal Reserve System



• Chapter 15: THE TOOLS OF THE FED!
  • The Market for Reserves adn the Federal Funds Rate
    • Demand and Supply Curve
    • Open Market Operations
    • Discount Lending
    • Reserve Requirements
    • Open Market Operations - A Day in the Trading Desk ... Advantages
    • Discount Policy - Lender of Last Resort
    • Reserve Requirements - Adv and Disadv
  • Miskin Chapter 15 PPT
  
  



December 27, 2012:  Chapter 16 - What Should Central Banks Do?



• Chapter 16:  What Should Central Banks Do?
• The Six Goals of Central Banks
  • Price Stability and the Nominal Anchor
  • Central Banks' Main Goal
  • Hyperinflation
  • The Role of a Nominal Anchor - for example Core PCE inflation of 2%
  • The Time-inconsistency Problem - too easy, too often - no unexpected changes
• High Employment
  • Two main reasons: human misery and loss of real GDP
  • Natural Rate of Unemployment - definition and how it is used.
• Economic Growth - usually follows the High Employment goal
• Stability of Financial Markets
• Interest Rate Stability
• Stability in Foreign Exchange Markets
• Miskin Chapter 16 PPT
• Andrew's Day 10 PPT - Thoughts
• Andrew's PPT - Hyperinflation

                  Week 4



December 18, 2012:  Chapter 13 continued and begin Chapter 14: Determinants of the Money Supply



• Chapter 13 - Multiple Deposit Creation (continued)
• Multiple Deposit Creation: A Smiple Model
  • 4 Assumptions
  • A Single Bank
  • The Banking System
  • Deriving the Formula
  • The Critique


• Chapter 14: The Money Supply Model
  • Deriving the Money Multiplier
  • Intuition BEHIND the Multiplier
  • An Example with the FULL multiplier
• Problem Set #2: How Banks Create Money and the Simple Money Multiplier
• Miskin Chapter 14 PPT



December 20, 2012:  Chapter 14 - Multiple Deposit Creation



• Chapter 14: Multiple Deposit Creation
  • An application - Explaining Movements in the Money Supply, 1985-2005
  • Another application - The Great Depression Panics, 1930-33
  
  
• Chapter 15: THE TOOLS OF THE FED!
  • The Market for Reserves adn the Federal Funds Rate
    • Demand and Supply Curve
    • Open Market Operations
    • Discount Lending
    • Reserve Requirements
• Problem Set #3: Calculations of changes in the Money Supply
• Miskin Chapter 15 PPT

                  Week 3



December 11, 2012:  Chapter 12 - The Structure of the Federal Reserve System



• Chapter 12: The Structure of the Federal Reserve System
• Origins
• Formal Structure
  • Member Banks - What do they do?
  • Board of Governors - 7 members
  • FOMC - the 12 members who decide on policy
  • Special Role of the NY Fed Bank
  • FOMC and their meetings
• Who runs the Show? - the Informal Structure
• How independent IS the Fed?
• The ECB and other Central Banks
• Miskin Chapter 12 PPT
• Problem Set #2: How Banks Create Money and the Simple Money Multiplier
• Andrew's Day 5 PPT



December 13, 2012:  Chapter 13 - Multiple Deposit Creation



• Chapter 13: Multiple Deposit Creation
  • Four Players in the Money Supply Process
  • The Fed's Balance Sheet
  • Control of the Monetary Base (high-powered money)
    • Federal Reserve Open Market Purchases and Sales from a bank versus the nonbank public
    • Shifts from Deposits into Currency
    • Foreign Exchange Intervention and the Monetary Base
    • Discount Loans
    • Other Factors and the Ability of the Fed to actually control the Monetary Base
  • Multiple Deposit Creation: A Smiple Model
    • 4 Assumptions
    • A Single Bank
    • The Banking System
    • Deriving the Formula
    • The Critique
• Miskin Chapter 13 PPT

                  Week 2





December 4, 2012:   Chapter 5: continued and Chapter 9: An Introduction to Banking



• Chapter 5: The Supply and Demand for Bonds (Loanable Funds) continued
  • The Bond Market and Loanable Funds Market
    • The Loanable Funds Market - LF Framework and LF Graph p. 92, the interest rate and price of bonds are now inverted!
  • All Shifts need to be studied but particular mention must be made to:
    • The Fisher Effect: Changes in expected inflation or disinflation
    • The Wealth Effect: Changes in Real GDP or other wealth aspects
    • The Government Budget Deficit - borrowing more
  • Required for the test:  Understanding the Wealth Effect and Fisher Effect scenarios
    (as well as the effect of high budget deficits) graphically.
  
  
• Chapter 9: Banking and the Management of Financial Institutions
  • The Balance Sheet
    • The 4 assets and 4 liabilities of a bank
• Miskin Chapter 9 PPT



December 6, 2012:   Chapter 9 - Banking and the Management of Financial Institutions



• Chapter 9 - Banking and the Management of Financial Institutions
  • The Balance Sheet
    • The 4 assets and 4 liabilities of a bank
  • Basic Banking
  • General Principles of Bank Management
  • Asset Management
  • Liability Management (money center banks)
  • Capital Adequacy Management (ROA and EM)
  • Managing Credit Risk (Screening and Monitoring)
  • Credit Rationing
  • Off Balance Sheet Activities
• Miskin Chapter 9 PPT
• Andrew's Day 4 PPT

                  Week 1



November 27, 2012:  Chapter 1 - Why study this course?



• FIRST DAY - Discusss the Syllabus 
• Introduction to the course - Chapter 1
• Appendix to Chapter 1
• What is a price index and how do we calculate them? What is a price level?  CPI, GDP deflator and PPI
• Growth rates (inflation rate) were reviewed
• Review the price indicies homework, questions?
• Miskin Chapter 1 PPT - Updated
• Miskin Chapter 1 Appendix PPT
• Problem Set I will be, due November 29, 2012 (10 points)


• Read Chapter 2: An Overview of the course  
• Money Market Financial Instruments
  • US Treasury Bills
  • Commercial Paper
  • Repurchase Agreements
  • Federal Funds - borrowing of excess reserves by banks from banks
  • Eurodollars
• Internationalization of Financial Markets
• Function of Financial Markets - make sure to pick up the definitions of Transaction Costs, Risk Sharing,
  Asymmetric Information: Adverse Selection and Moral Hazard
• A few comments on Financial Institutions and Regulation
• Miskin Chapter 2 PPT


• Chapter 3: What is Money?
  • 3 Functions of Money
  • Fiat versus Commodity Money
  • MMMMs - the Measurement of Money
• Miskin Chapter 3 PPT
• Andrew's Day 1 PPT



November 29, 2012:   Chapter 5: The Behavior of Interest Rates



• Problem Set 1 due (10 points)
• An introduction to Chapter 5: The Supply and Demand for Bonds (Loanable Funds)
  - we have looked at this before in Macroeconomics 
• The Determinants of Asset Demand
  • Wealth
  • Expected Returns (including expected inflation)
  • Risk
  • Liquidity
• Memories from Macroeconomics
  • Liquidity Preference and Loanable Funds Markets Resolved, Short-Run
  • Liquidity Preference and Loanable Funds Markets Resolved, Long-Run
• The Theory of Asset Demand
  • The Demand Curve - (Savers Supplying Loanable Funds)
  • The Bond Supply Curve - (Borrowers Demanding Loanable Funds)
  • The Bond Market and Loanable Funds Market
    • The Loanable Funds Market - LF Framework and LF Graph p. 92, the interest rate and price of bonds are now inverted!
  • All Shifts need to be studied but particular mention must be made to:
    • The Fisher Effect: Changes in expected inflation or disinflation
    • The Wealth Effect: Changes in Real GDP or other wealth aspects
    • The Government Budget Deficit - borrowing more
  • Required for the test:  Understanding the Wealth Effect and Fisher Effect scenarios
    (as well as the effect of high budget deficits) graphically.
  
  
  • Andrew's Day 2 PPT
  • Miskin Chapter 5 PPT