Department of Economics ECONOMICS 341-A1 Course Outline Michael Hoffman Spring 1999 Office: 9-8 Tory Building Telephone: 492-5323 E-mail: michael.hoffman@ualberta.ca Lecture Time: Monday 6:30 PM to 9:40 PM Wednesday 6:30 PM to 9:40 PM Office Hours: Monday 4:30 PM to 5:30 PM Wednesday 4:30 PM to 5:30 PM or by appointment OBJECTIVE OF COURSE This course is concerned with the analysis of money and credit in the exchange process. We will look at money and the payments system, portfolio choice theory, financial intermediation, the Canadian financial sector and its regulation, international components of money and banking, and the demand for money. REQUIRED TEXTS Binhammer, H. H., and Peter S. Sephton (1998). Money, Banking and the Canadian Financial System: Seventh Edition. Toronto: Publisher GRADE DETERMINATION Midterm #1 Monday, May 31 from 6:30 PM to 8:00 PM 30% Assignment Handed out June 2 in class Due Wednesday, June 9 at 6:30 PM 15% Final Exam Friday, June 18 55% 6:30 PM to 9:30 PM
- 2 - There is no assignment before the midterm. Throughout the course, you will be given suggestions about questions that you may find useful to examine. Also, you will be provided with some specific sample questions to help you prepare for the midterm. These questions are guidelines and will be representative of questions that may appear on the midterm. The midterm exam will consist of some multiple choice questions and a variety of shortanswer true/false/uncertain questions. The short-answer questions may require some calculations and/or diagrams. You may use a calculator if you wish. If you cannot write the midterm exam in class on May 31, you must let the professor know in advance so that arrangements can be made for you to write the midterm in advance. No midterms will be written after the midterm date unless you provide a medical certificate or equivalent. If for medical reasons you are unable to write the midterm on May 31 and you have not written the midterm by June 5 the full weight of the midterm will be transferred to the final examination. The assignment will consist of questions relating to the material on portfolio choice theory. You may consult with classmates on this assignment, but the work you hand in must be your own. The final examination will be cumulative although more emphasis will be placed on the material since the midterm. This exam is scheduled by the Registrar s Office. You may not write the final exam after the scheduled time unless you receive permission from the Registrar s Office to write a deferred exam. If you need to defer the final examination, contact the Registrar s Office. If for some reason you need to write the exam a few days early, contact the professor as soon as possible to see if arrangements can be made. You must familiarise yourself with the Code of Student Conduct in the University Calendar, notably the sections on plagiarism and cheating. COURSE WEBSITE The course website is: www.ualberta.ca/~econweb/econ341/341home.html. On the website, you will find the course outline, sample questions, and the overhead presentation slides. Answers to the midterm will be posted after the exams are marked as will the answers to the assignment.
- 3 - COURSE OUTLINE I. MONEY AND THE PAYMENTS SYSTEM 1. The nature and functions of money 2. The composition of the Canadian money supply 3. The Canadian payments system Chapter 1 II. III. IV. FINANCIAL MARKETS AND FINANCIAL INSTRUMENTS 1. Types of financial markets and financial instruments 2. Prices and yields of financial instruments 3. Term structure of interest rates Chapters 3, 4, and 5 THE THEORY OF FINANCIAL MARKETS 1. Intertemporal consumption 2. Portfolio choice theory Chapters 2, 6, and Portfolio choice theory handout. FINANCIAL INTERMEDIARIES AND CANADIAN BANKING 1. Payments intermediation and the creation of money 2. Payments intermediation, risk, and risk management 3. Development of Canadian banking 4. Chartered banks, near banks, non-depository financial institutions and the Bank of Canada Chapters 7, 8, 10, 11, 12, and 13
- 4 - V. REGULATION 1. Regulation of financial intermediaries 2. Regulatory reforms in Canada Chapter 9 VI. INTERNATIONAL COMPONENTS OF MONEY AND BANKING 1. Exchange rates and international payments transactions 2. International financial markets Chapters 22 and 24 VII. MONEY SUPPLY AND MONEY DEMAND 1. The demand for money 2. Monetarism and the quantity theory of money Chapters 19 and 20
LECTURE DATES Subject 1. Monday May 10 Introduction to Course (½ hour) Chapter 1 (2½ hours) 2. Wednesday May 12 Chapter 5 (2 hours) Chapter 3 (start for 1 hour) 3. Monday May 17 Chapter 3 (finish for ½ hour) Chapter 4 (2½ hours) 4. Wednesday May 19 Chapter 2 (3 hours) 5. Monday May 24 VICTORIA DAY HOLIDAY 6. Wednesday May 26 Chapter 6 (3 hours) 7. Monday May 31 MIDTERM EXAM (MDH Away) (up to Intertemporal Choice) 8. Wednesday June 2 Chapter 6 (1 hour) Chapter 7 (2 hours) 9. Monday June 7 Chapter 8 (1 hour) Chapter 10-13 (2 hours) 10. Wednesday June 9 Chapter 9 (3 hours) 11. Monday June 14 Chapters 22-24 (3 hours) 12. Wednesday June 16 Chapter 19 (3 hours)