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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 2008Denise HazlettOffice: Maxey 212Phone: 527-5155email: hazletthomepage: http://people.whitman.edu/~hazlett/Cleo email address for the course: [email protected] Office hours are the following, or by appointment. Monday, Tuesday, Wednesday and Thursday 2:30-3:30Wednesday and Friday 11:00-11:45The 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. Please show all of your work on yourproblem sets. We will devote three class meetings to discussions, as noted on the syllabus.Preparation for and participation in these discussions counts for 20 points. On November 6, youwill make a presentation on a foreign country’s monetary policy. The description of thisassignment is attached. There are two mid-term exams worth 100 points each, and acomprehensive final worth 200 points. The dates for the exams are marked on the reading list.Please arrange your schedule now so that you do not have conflicts with exam dates. I will notoffer exams at times other than those scheduled. To help you study, old exams are available athttp://people.whitman.edu/~hazlett/index.htm. If you have a registered disability that requiresspecial accommodation for exams, please see me a week before each exam so that we can makearrangements. The grading scale for the course is as follows. Note that there is no disadvantageto studying with others, 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 regularly read articlesfrom the Wall Street Journal on 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 real Gross DomesticProduct, unemployment, inflation and interest rates, productivity and consumer confidence. Youwill also read articles that report on and analyze the Fed’s behavior. Finally, you will followdevelopments that relate to macroeconomic issues involving money and financial intermediariessuch as banks. However, you do not need to read articles describing the microeconomicperformance of an individual bank. Because the WSJ does not check its op-ed pieces foraccuracy, we will not be discussing opinion, editorial or commentary 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 about the day’s relevant articles. Send to the class cleo email address, from your Whitmanemail account. The responsible person will give the title and page number of each article, andwrite a summary of each article and a question focusing on the main point of the article, withparticular attention to what makes the article relevant for monetary theory and policy. Each emailis due by 10 pm on the day the WSJ issue is published. The rest of the class will read the articlesand come prepared to discuss their contents and to answer the question. The alerting assignmentis worth 40 points, based on the appropriateness of articles you select and the quality ofthe questions you ask and the answers you give to other people’s questions.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. From the library's home page, click on the "Journalsat Penrose" link. Type in "Wall Street Journal" in the search box. Click on the link for "Pro QuestNational Newspapers Core". Inflation Targeting AssignmentYou will research a country that has adopted a policy of inflation targeting, and prepare a five-minute presentation for November 6 on how the policy has affected the country’s macroeconomicperformance. You may choose New Zealand, Chile, Australia, Canada, 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 yourcountry been targeting inflation and what have been the economic consequences? Do the policy-makers and the citizens think the policy has worked well?


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