Total PointsGradeTotal PointsGradeWall Street Journal Reading AssignmentInflation Targeting AssignmentPart I: MoneyPart II: InflationPart III: The Financial System and Interest RatesPart IV: The Central BankPart V: Monetary TheoryEcon 407Monetary Theory and PolicyWhitman CollegeFall 2006Denise HazlettOffice: Maxey 212Phone: 527-5155email: hazletthomepage: http://people.whitman.edu/~hazlett/index.htmOffice hours are the following, or by appointment:Monday 10:30-11:00, 2:30-3:00Tuesday, Wednesday and Thursday 11:00-11:30, 2:30-3:00Friday 11:00-11:30The objective of this course is to explore the economic roles of money, financial intermediaries,and central bank controls. The course text is Money, Banking and Financial Markets, 8th ed. byFrederic Mishkin. Other readings marked on the reading list are available on the Internet at theurls indicated, or handouts distributed in class and on loan to you for the semester. Please returnthe ones on loan at the final exam. Because we will discuss current monetary policy in class, youare also required to regularly read the Wall Street Journal (WSJ). A description of the WSJreading assignment is attached. There are nine problem sets worth a total of 65 points. These problem sets are attached to thissyllabus and are due at the beginning of class on the dates marked on the reading list, unlessotherwise noted. I will not accept late or illegible problem sets. You may work with others on theproblem sets, but must write up your answers individually. We will devote three class meetings todiscussions, as noted on the syllabus. Preparation for and participation in these discussions countsfor 20 points. On October 25, you will make a presentation on a foreign country’s monetarypolicy. The description of this assignment is attached. There are two mid-term exams worth 100points each, and a comprehensive final worth 200 points. The dates for the exams are marked onthe reading list. Please arrange your schedule now so that you do not have conflicts with examdates. I will not offer exams at times other than those scheduled. To help you study, old examsare available at http://people.whitman.edu/~hazlett/tests/. The grading scale for the course is as follows. Note that there is no disadvantage to studying withothers, as your grade does not depend on anyone else's performance.Total Points (% of 540) Grade Total Points (% of 540) Grade52998 A+40074 C+50894 A37870 C48690 A-35666 C-46486 B+33562 D+44382 B31358 D42178 B-29254 D-1Wall Street Journal Reading AssignmentSo that we can discuss current monetary policy in class, you are required to read articles from theWall Street Journal that cover topics in monetary economics. You’ll use the WSJ to track theperformance of the U.S. macroeconomy, the actions of the Federal Reserve, and macroeconomicissues related to money and financial intermediation. The information to look for on themacroeconomy includes the reports that the Fed tracks, such as data on Gross Domestic Product,unemployment, inflation and interest rates, productivity and consumer confidence. You will alsoread articles that report on and analyze the Fed’s behavior. Finally, you will follow developmentsthat relate to macroeconomic issues involving money and financial intermediaries such as banks.However, you do not need to read articles describing the microeconomic performance of anindividual bank. Because the WSJ does not check its op-ed pieces for accuracy, we will not bediscussing any of the opinion or editorial articles. Each week, on a rotating basis, one member of the class will be responsible for alerting the rest ofthe class to the relevant articles in the WSJ. Each day of that week, that person will email theclass with a list of the titles of the day’s relevant articles, and a summary of each. (The classlistserv is [email protected].) For each article, the responsible person will write aquestion focusing on the main point of the article, with particular attention to what makes thearticle relevant for monetary theory and policy. Each email is due by 9:00 am the day after theWSJ issue is published. The rest of the class will read the articles and come prepared to discusstheir contents and to answer the question. The alerting assignment is worth 40 points for thesemester, based on the quality of the questions asked and the articles selected. You can subscribe to the WSJ (which gives you both print and electronic access to the WSJ’sWestern Edition), read the library’s print edition, or use the following steps to access the library’se-WSJ subscription to the Eastern Edition. 1. From the library's home page, click on the "Find a Journal at Penrose Library" link.2. Type in "Wall Street Journal" in the search box.3. Click on the link for "National Newspapers". Inflation Targeting AssignmentYou will research a country that has adopted a policy of inflation targeting, and prepare a ten-minute presentation for October 25 on how the policy has affected the country’s macroeconomicperformance. You may choose either New Zealand, Chile, Australia, the United Kingdom,Sweden, Finland, Norway, Iceland, Switzerland, the Czech Republic, Poland, South Korea,Thailand, Israel, Brazil, Mexico, Peru, Turkey, the Philippines, or South Africa. In yourpresentation, you should include information about the specific form that inflation targeting takesin your country, and the economic results of the policy. So, you should keep in mind thefollowing questions as you conduct your research. What is the specific target (or target range) forinflation and how much time do policy-makers have to achieve the target? Is the goal to achieveonly an inflation target, or is there also a goal to stabilize real output? How long has your2country been targeting inflation and what have been the economic consequences? Do the policy-makers and the citizens think the policy has worked well? (15 points)Reading List Part I: MoneyAugust30 History of thought on money Discussion: Smith "Of the Origin and Use of Money," Jevons "Money and the Mechanism of Exchange,” Menger "On the Origin of Money"September4 Measuring money, history of money in U.S. Mishkin chps 1 and 3FRB of Chicago’s “Money Matters: The American Experience with Money” 6 A POW camp as a monetary economyDiscussion: Radford “The