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Economics Department

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ECN 135: Money and Banking
Professor Kevin D. Salyer
Spring Quarter, 2008
Office Hours: Tuesday and Thursday, 1-2:30.
Midterm Grading Scale
Course Outline and Readings
I. Weeks 1 and 2 - Overview, Bond Pricing and
Duration
Kolb & Rodriguez, Chapters 4, 7, 13. Handouts on Bond
Pricing and Duration
Slides: Introduction, Bank Overview, Financial market overview, bond pricing
II. Weeks 3 and 4 - Term Structure, Hedging Interest Rate Risk
Kolb & Rodriguez, Chapters 6
& 14. Hamilton blog
on term structure.
Belongia
& Santoni
Slides: Yield Curve,
Financial Statements,
Gap Analysis, Financial Futures
Interest Rates Swaps, Securitization, Subprime Primer,
New Monetary Policy
III. Week 5 - Housing Finance, the Subprime mess, MIDTERM
Sellon
& VanHahmen, WSJ
article
on subprime meltdown, Chapter 2
2008 Economic Report of the President, Edmiston
& Zalneraitis.
IV. Weeks 6 - 8 - Models of Banking: Liquidity Insurance and
Asymmetric
Information
Freixas & Rochet, Chapter
2, Gertler & Hubbard.
Article on Risk
Aversion and Diversification, Optimal Insurance (5/8 lecture)
V. Weeks 9 - 10
Gali
& Gertler
AD slides: large file, small file
(handouts for printing)
Taylor rule slides: large
file, small file
(handouts for printing)
Article from The Economist: John
Taylor on the housing bubble
AS slides: large file, small file (handouts for
printing)
Midterm
Midterm Answer Key
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Homework
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Supplemental Reading: History of the Federal Reserve
(Not Required)
A. Muelendyke U.S.
Monetary Policy, Chap. 1
A. Muelendyke U.S. Monetary
Policy, Chap. 2
(Fed
history notes)
Federal
Reserve System:
Purposes and Functions
(background
article on inflation targeting by Mishkin, et.al)
Economic News:

Resources for
Economists
Economic Data:
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