Schedule for Econ 215 / Waters
Updated 8-21-12
Students are responsible for all material, questions and problems in the chapters listed, with the
exception of appendices, unless otherwise stated in class. The Chapters refer to the textbook by
Quadrini and Wright.
Chapter 1
Money, Banking and your World
Chapter 2
The Financial System
Chapter 3
Money
Assignment due Thursday, August 31 Web Exercise 1 (see p.2 of schedule)
Chapter 4
Interest Rates
Quiz on Chapters 3-4 on Tuesday, September 11
Chapter 5
The Economics of Interest Rate Fluctuations
Chapter 6
The Economics of Interest-Rate Spreads and Yield Curves
Midterm on Chapters 1-5 on Thursday, September 20
Chapter 8
Financial Structure, Transaction Costs, and Asymmetric Information
Chapter 9
Bank Management
Quiz on Chapters 6, and 8 on Wednesday, October 5
Chapter 10
Innovation and Structure in Banking and Finance
Chapter 11
Economics of Financial Regulation
Chapter 12
The Financial Crisis of 2007-2008
Preliminary presentation summary due Wednesday, October 19
Chapter 13
Central Bank Form and Function
Midterm on Chapters 6, 8-13 on Wednesday, October 26
Two page presentation summary due on Wednesday, November 2
One page essay on the financial crisis due Monday, November 7
Chapter 14
Chapter 15
The Money Supply Process
Monetary Policy Tools
Chapter 16
Monetary Policy Goals and Targets
Monetary Policy Graphing Assignment due Wednesday, November 16
See web exercise 2 below
Chapter 20
Chapter 22
Money Demand
Aggregate Demand and Supply
Presentations will be Novermber 28, 30 and December 5
Final exam for ECO 215-01 (12:35) on The final is comprehensive but weighted toward
material in the last third of the class.
Web exercise 1: Construct a time series graph for a real interest rate. Go to
http://research.stlouisfed.org/fred2/ .From the link for “Consumer Price Index”, download
the data for one of the CPI series into a spreadsheet. Do the same for the monthly 10Year Treasury Constant Maturity Rate from the “Interest Rates” section. Use the
maximum series length for each. [You must construct an inflation series from the CPI by
calculation the percent change over the previous year for each month.] (Use a little
cleverness with the spreadsheet to avoid doing this for each month). Subtract inflation
from the nominal rate to create the real rate on the 10 year bond, making sure the dates
for both series match.
Show the series for the inflation, nominal rate and real rate on the same graph.
Answer the following questions.
1) When was inflation the highest? What did this mean for interest rates?
2) What is the most dramatic change in the real interest rate?
3) Are there any historical events to explain it?
Web exercise 2: Construct time series graphs for the monetary policy rates in the GreenspanBernanke era, 1987-present. From the St. Louis Fed website
http://research.stlouisfed.org/fred2/ , download monthly data for the discount rate, the
primary credit rate and the federal funds rate. Also download data for the Consumer
Price Index Less Food and Energy under CPI>Special Indexes. Put all the data going
back to 1986 on one spreadsheet, combining the discount rate and primary credit rate into
one series. Construct core inflation using the CPILFE data, and construct the real federal
funds rate series.
Make one graph with the (nominal) fed funds rate and discount/primary credit
rate. Make another graph for the real fed funds rate.
Answer the following:
What was the difference in the behavior of the rates, when the Fed switched to
the primary credit rate?
When was the real federal funds rate negative? Why did this happen?
Web Exercise 3: Graph the time series for different interest rates. Go to
http://research.stlouisfed.org/fred2/ and download interest rates for 3 different bonds, the
3 month treasury bill (TB3MS), the 10-year bond (GS10, under Treasury Constant
Maturity) and the Corporate BAA bond. Use monthly data for all three series and get
data going back at least to 1960, making sure that the dates match. Graph all of these on
a single page for comparison, and answer the following questions:
1) Is one of the rates persistently higher than the others? Can you give a possible reason
why or why not.
2) Is there any difference between the two government bond rates?