ECO215 MONEY AND BANKING
Instructor: Daniel Hwang, Ph.D.
Class Hours: M & W 1:40-2:55 (KH 313), 3:05-4:20 (Rathaus 210), 4:30-5:45 (PH 152)
Office Hours: W 12:30-1:30pm, PH 300
This course will focus on comprehensive contents of monetary theory and monetary
policy. Two major topics are: (1) Central banking and its conduct of monetary
policy and (2) modern monetary theory – the study of the dynamic interaction of
inflation with economic activity, using a dynamic aggregate demand and supply
Textbook: F.S. Mishkin, The Economics of Money, Banking and Financial Markets,
Addison Wesley, 10th
Lecture Notes: The notes for each lecture will be posted on Blackboard before
each class. You are expected to print and bring the lecture notes in each class.
What’s New in the Tenth Edition (from the textbook) – The following 5 chapters
are completely rewritten!!!
(1) A Buildup of the Dynamic AD/AS model
Chapter 20 develops the first building block of AD/AS model, the IS curve.
Chapter 21 describes how monetary policymakers set real interest rates with the
monetary policy (MP) curve. It then uses the MP curve to derive the dynamic AD
Chapter 22 derives the SRAS and LRAS curves and then puts all of them together
with AD curve to develop the dynamic AD/AS model. This model is then put to use
with numerous applications analyzing business cycle fluctuations in the U.S. and in
(2) A Dynamic Approach to Monetary Theory
Chapter 23 examines the theory of monetary policy and helps understand how
monetary policymakers can respond to shocks to the economy in order to stabilize
both inflation and economic activity.
Chapter 24 discusses the role of expectations in monetary policy and the role of
credibility in producing good policy outcomes.
(3) The Interaction of Finance and Monetary Theory
This book is the first textbook that responds to the challenges raised by critics of
monetary theory by bringing finance directly into the AD/AS model.
Tentative CLASS SCHEDULE:
Weeks Chapters HW Assignments
Week 1 Ch.4 Understanding Interest Rates
Ch.5 The Behavior of Interest Rates
Ch.4 – 14, 17, 18, 21, 24
Ch.5 – 1, 4, 11, 18, 19, 21, 22
Week 2 Ch. 13 Central Banks and the Federal
Ch.14 The Money Supply Process
Ch.13 – 14, 15, 22, 23, 24
Ch. 14 – 1, 3, 5, 8, 14, 15, 18,
Week 3 Ch. 15 Tools of Monetary Policy Ch.15 – 8, 9, 11, 15, 18, 20,
Week 4 Ch.16 The Conduct of Monetary Policy:
Strategy and Tactics
Ch.16 – 5, 11, 12, 19, 21, 23,
Week 5 Test 1
Week 6 Ch.19 Quantity Theory, Inflation, and
The Demand for Money
Ch.19 – 14, 17, 21, 22, 23, 24
Week 7 Ch. 20 The IS Model Ch.20 – 8, 9, 14, 18, 20, 21,
Week 8 Ch. 21 Monetary Policy and Aggregate
Ch.21 – 6, 7, 13, 19, 23, 24
Week 9 Ch. 22 Aggregate Demand and Supply
Ch.22 – 3, 6, 12, 14, 21, 24,
Week 10 Test 2
Week 11 Ch.23 Monetary Policy Theory Ch.23 – 3, 8, 12, 15, 19, 21,
Week 12 Ch. 24 The Role of Expectations in
Ch.24 – 3, 14, 17, 22, 24
Week 13 Ch.25 Transmission Mechanisms of
Ch.25 – 1, 2, 4, 7, 13, 14, 21
Week 14 Ch.17 & 18 International Finance and
Week 15 Test 3
Grading and Exams: The grade will be based on Homework Assignments (=class
Participation) and three exams. The course grade is determined as follows:
Participation (= Assignments) (10%), Three Exams (Each 30%). The assignments
will be Questions and Applied Problems at the end of each chapter.
Homework Assignment will be given out in class. The purpose of the assignments
is to let you gauge your understanding of the material being covered in the class.
The assignments will also prepare you for the exams. Make every effort to go over
and answer the assigned assignment. The due date (hand-in) is the next class
day. Handing it in after the due date will reduce the grade by half.
Exam 1 30 Points
Exam 2 30 Points
Exam 3 30 Points
HW Assignments (Participation) 10 Points
Total Points 100 points
Important information on grading and exams:
- All exams are closed book exams.
- The final letter grade for the course will be based on individual mastery of
the course material as displayed by the overall score and will be curved.
- Exams will be a combination of multiple-choice, analytical, and short-essay-
type questions. Anything that appears in homework problem sets and lecture
notes is fair game on the exams.
- While there is no make up for a bad performance on an exam, upward trend
in exam performance over the semester is considered favorably while
assigning the Final letter grade.
- There is no make-up midterm exam. Medical problems, family emergencies
and university excused absences are the only acceptable reasons for missing
an exam. You must get in touch with me as soon as possible in such cases
and schedule a make-up exam. The student must also be prepared to
provide supporting documents – such as a letter from the physician, note
from a family member or a university authority. All unexcused absences from
exams will automatically earn a zero.
- Participation: You are expected to attend class, follow the lectures and
participate in class discussions.
Attendance: Due to the technical nature of the material, attendance and
participation in class discussion is a high priority. These will determine your ability
to succeed on the examinations and in class projects. I expect you to attend class
on a regular basis, although there is no explicit grade for attendance. I shall check
your attendance in class randomly.
Tutoring: The Tutoring Center offers individual learning consultations, study group
assistance, or handouts and books on study skills. The tutoring schedules will be
posted. To learn more about resources available through the Learning Center you
are encouraged to drop by the free tutoring center in the KH or visit their website.
Special Assistance: If you have a documented disability and anticipate needing
accommodations in this course, please make arrangements to meet with me very
soon. Please request that a Disability Resources staff send me a SAAR form
verifying your disability and specifying the accommodation you will need. Request
must be received and approved (including instructor approval) at least one week
before the necessary accommodation. All relevant information will be kept strictly