YORK UNIVERSITY
FACULTY OF LIBERAL ARTS AND PROFESSIONAL STUDIES
AP/ECON 3430 3.0 A – MONETARY ECONOMICS I: FINANCIAL MARKETS AND INSTITUTIONS
FALL 2014
Contact Information:
Professor Brenda Spotton Visano
Office: 130 McLaughlin
Voice Mail: (416) 736-2100 ext. 20470
E-mail: spotton@yorku.ca
Lecture Information:
Monday 7pm – 10pm
Classroom: ACW 006
Office hours: Monday 3pm-6pm,
or by appointment
Teaching Assistant: TBA
Economics Main Office, Vari Hall 1144 Tel: (416) 736-5083
CALENDAR COURSE DESCRIPTION:
Studies the principal financial institutions and markets in the Canadian economy. Analyzes the
economic function, regulation, and operational features of these institutions and markets. Considers
the corresponding institutions and markets in other countries. Prerequisites: AP/ECON 1000 3.00
and AP/ECON 1010 3.00 or equivalents. Course credit exclusion: GL/ECON 3380 3.00. PRIOR TO
FALL 2009: Course credit exclusions: AK/ECON 3430 3.00, AS/ECON 3140 3.00, GL/ECON 3380 3.00.
TEXTS
Recommended Textbook: Stephen G. Cecchetti and Angela Redish Money, Banking and Financial
Markets, McGraw-Hill Ryerson, 2010
EVALUATING INTERNET RESOURCES
http://www.library.georgetown.edu/tutorials/research-guides/evaluating-internet-content
EXPANDED COURSE DESCRIPTION AND LEARNING OBJECTIVES
Organization of the Course: The course involves formal lectures by the instructor and guided class
discussions around a series of topics designed to motivate conceptually and intuitively the topics we
cover. Informal group work is encouraged. The required readings are central to the course. The
lectures and class discussions will serve to motivate and enrich the crucial issues from the assigned
readings.
A dedicated student would ideally review the assigned materials in advance of the class, participate
in class discussions, read the materials in detail after the class, and review the class questions to
ensure he or she has the best possible understanding of the material. A group of dedicated students
might get together to discuss that which appears confusing, to critique each other’s proposed
answers/responses to the class questions and learning outcomes, and to pose additional questions
for each other (or the rest of the class).
Learning Objectives Guiding Course Design, Delivery, and Student Evaluation:
1. Enable a conceptual and practical understanding of the financial system as a set of formal and
informal institutions designed to transfer purchasing power; identify and define the various
financial instruments, prices, markets, formal institutions, and relevant legislation.
2. Critique the effectiveness of the current financial system in promoting savings and investment
with reference to economic efficiency and social desirability.
3. Assess the basic decision and portfolio frameworks used to explain both financial decisions
and financial institutions.
4. Explain the interaction between (a) economic and financial needs, (b) financial regulation, and
(c) technological developments in explaining the evolution of the financial system.
5. Critique a model or policy position in terms of political influences and institutional
assumptions; use logic and reasoning, analysis and synthesis to argue well supported
assessments written in a clear, well-organized and focused manner, in a style that is
compelling.
EVALUATION
The final grade for the course will be based on the following submissions, weights as indicated:
Quizzes: 40% (4 quizzes, 10% each)
Take Home Assignments: 60% (3 Assignments, 20% each)
The Quizzes will comprise short essay-type questions—with and without basic calculations
required. They will focus on that material which was covered in the lecture and assigned readings
since the previous quiz. .
Assignments: There will be THREE assignments. Late penalty (applied when no accommodation has
been granted): 5/100 marks per day.
Superior performance on the assignments will require more than a solid understanding of
the material; superior performance will require an ability to synthesize, analyze and organize
economic information in well-structured, well-written arguments supporting or refuting hypotheses
related to assignment questions.
Missed Quizzes: Students with a documented reason (such as illness or compassionate grounds) for
missing a quiz may request accommodation from the Course Instructor. A makeup quiz will be
available to students who have been granted accommodation. Additional extensions will require
students submit a formal petition to their home Faculty.
FALL 2014 CLASS MEETS, COURSE OUTLINE, AND CRITICAL DATES
DATE
September 8
First Class
Introduction, C&R Ch. 1
September 15
Money, C&R Ch. 2
September 22
Financial Instruments and Markets, C&R Chs 3,4
Last Day to enroll On-line
September 29
Quiz #1: 7-7:45 pm (10%)
Theories of Interest Rates, C&R Ch 6
October 6
The Term Structure of Interest Rates, C&R Ch 7
Last Day to enroll with Instructor Permission
October 13
Thanksgiving – No Class; University Closed
October 20
Assignment #1 Due at 7pm (20%)
Asset Prices and Asset Market Crashes, C&R Ch 8
October 27
Quiz #2: 7-7:45 pm (10%)
Financial Intermediation, C&R Ch 11
November 3
Financial Intermediaries, C&R Ch 12, 13
November 7
Last Day to Drop without Receiving a Grade
November 10
Assignment #2 Due at 7pm (20%)
Regulation of the Financial System, C&R Ch 14
November 17
Quiz #3: 7-7:45 pm (10%)
Central Banking, C&R Chs 15, 16
November 24
Assignment #3 Due at 7pm (20%)
Financial Crises, C&R Ch 23
December 1
Quiz #4: 7-8:30 pm (10%)
Last Class
December 9-22
Fall Exam Period
ASSIGNMENTS
Assignment #1:
Is the crypto-currency Bitcoin “money”? In answering this question, consider the definitions of
money, the characteristics of money, and the measurement of the Canadian money supply. Should
Bitcoin be regulated in the same way Canadian currency is regulated? Explain.
Your answer should be 3-5 typed pages and accurately referenced.
References
Satoshi Nakamoto “Bitcoin: A Peer-to-Peer Electronic Cash System” Posted at
http://bitcoin.org/bitcoin.pdf (Retrieved July 11, 2013)
Assignment #2:
Identify the appropriate interest rates/yields and plot the Canadian yield curve for interest rates 1month, 3-month, 6-months, 1 - 3years forward. Properly cite your source. Explain why you chose the
rates you did.
From now (Fall 2014) until October 2015, will interest rates likely go up, stay the same or decline?
Explain your reasoning in detail. Include consideration of the Augmented Expectations Hypothesis of
the Term Structure of Interest Rates.
Your answer should be 3-5 typed pages and accurately referenced.
Assignment #3:
Is a payday loan company a “bank”? In answering this question, consider the definitions of a bank,
the characteristics of a bank, and the regulation of financial institutions in Canada. Should a Payday
Loan operation be regulated in the same way Chartered Banks are regulated? Explain.
Your answer should be 3-5 typed pages and accurately referenced.
P.S. SOME HUMOROUS TIPS FOR WRITING
Rules for Writers (by William Safire) combined with Newsman's English (by Harold Evans) as posted
http://core.ecu.edu/psyc/wuenschk/thhumor.htm (Retrieved August 29, 2006)
Remember to never split an infinitive. The passive voice should never be used. Do not put statements in the
negative form, and don't use no double negatives. Verbs has to agree with their subjects. Proofread carefully to
see if you any words out. If you reread your work, you can find on rereading a great deal of repetition can be
avoided by rereading and editing. A writer must not shift your point of view. And don't start a sentence with a
conjunction. (Remember, too, a preposition is a terrible word to end a sentence with.) Don't overuse
exclamation marks!! Use apostrophe's correctly, and don't use commas, which, aren't necessary. Place pronouns
as close as possible, especially in long sentences, as of 10 or more words, to their antecedents. About those
sentence frag- ments. Writing carefully, dangling participles must be avoided. If any word is improper at the end
of a sentence, a linking verb is. Take the bull by the hand and avoid mixing metaphors. Avoid trendy locutions
that sound flaky. Everyone should be careful to use a singular pronoun with singular nouns in their writing.
Always pick on the correct idiom. The adverb always follows the verb. Corect speling is esential. Last but not
least, avoid trite cliches like the plague.