Welcome to the Website of Shandong University MONEY and BANKING Course!


Course: Money and Banking  / Monetary Economics

Professor: Kong Danfeng

Credits: 3 credits

Required Textbook: Frederic S. Mishkin, The Economics of Money, Banking, and Financial Markets,

                  8th Edition, Addison Wesley, 2007.

Prerequisites: Introductory Microeconomics and Macroeconomics or the equivalent.

Tests: There will be onefinal. It may be a 5-7 page paper which can be on a topic related to the

theories, issues , ideas and/or policy debates discussed in the class.

Homework: Problem sets will be assigned periodically and exam questions will be based, in part, upon the problem sets.

Grading: The class presentation and regular attendance counts as 20%, and the final is worth 80%. 

Course Objective: This course focuses on the study of financial markets and institutions, monetary  theory and policy. The primary objective of this course is to help students know how money and banking institutions work, obtain a better understanding of key financial issues and equip students with the knowledge and tools necessary to answer financial questions. 

Course Outline:

1.    Why Study Money, Banking, and Financial Markets?

2.    An Overview of the Financial System

3.    What Is Money?

4.    Understanding Interest Rates

5.    The Behavior of Interest Rates

6.    The Risk and Term Structure of Interest Rates

7.    The Stock Market, the Theory of Rational Expectations, and the

              Efficient Markets Hypothesis

8.    An Economic Analysis of Financial Structure

9.    Banking and the Management of Banking Institutions

10.   Banking Industry: Structure and Competition

11.   Economic Analysis of Banking Regulation

12.   Structure of Central Banks and the Federal Reserve System

13.   Multiple Deposit Creation and the Money Supply Process

14.   Determinants of the Money Supply

15.   Tools of Monetary Policy

16.   What Should Central Banks Do? Monetary Policy Goals, Strategy and Tactics

17.   The Foreign Exchange Market

18.   The International Financial System

19.   The Demand for Money

20.   The ISLM Model

21.   Monetary and Fiscal Policy in the ISLM Model

22.   Aggregate Demand and Supply Analysis

23.   Transmission Mechanisms of Monetary Policy: The Evidence

24.   Money and Inflation

25.   Rational Expectations: Implications for Policy