REFLECTIONS ON THE FEDERAL RESERVE AND ITS PLACE IN TODAY'S ECONOMY

Assignments & Grading

Three components will comprise your grade.

  1. Class Participation 25% This will include participation in the class "labs." There will be four such labs that take place in addition to the Tuesday-Thursday, regularly scheduled class meeting times. Students need to attend all of them. Lab Session Dates: The presenters will provide a significant amount of information in their presentations. In addition, we will be hearing from a wide range of scholars with diverse expertise. While there will certainly be discussion, labs are required occasions for students to be able to fully digest the presentations and connect themes among the presenters. These sessions will also be out of the glare of the cameras and so may provide a more relaxed opportunity for discussion.
    • March 21, 2012, 6:00 PM - 6:50 PM Duques Room 356
    • April 4, 2012, 6:00 PM - 6:50 PM Duques Room 356
    • April 18, 2012, 6:00 PM - 6:50 PM Duques Room 356
    • May 2, 2012, 6:00 PM - 6:50 PM Duques Room 356
    My objective in class participation is not for you to attempt to impress the speakers. Instead, the criterion I use for evaluating effective class participation is whether your contributions advance the learning of your fellow classmates. Sometimes, a point is made by a classmate in a way that is better understood than one coming from a speaker. For example, when I started teaching 26 years ago, I was only a few years older than the students. I listened to the same songs; watched the same television shows and, generally, was part of the same generation and its culture. It was pretty easy to use examples that were part of the everyday language of my students. The hair on my head is proof that I no longer share students generation and so students may be able to make a point in ways more helpful than myself or one of the other formal class presenters. This is a real opportunity, then, for students to lead in the classroom and help its educational content. Please give thought to whether your questions and comments do, in fact, advance the learning of your classmates when contributing;
  2. Individual Reflection Paper 25% There will be an individual reflection paper on the lectures of Dr. Bernanke and the two discussions following it. More details will follow on this 3-5 page assignment; and
  3. Group Research Paper 50% The group research paper will look at the FRS and its connections to at least one of the other topics of the class. That is, there will be several presentations on issues pertaining to the Federal Reserve in the second half of the course. The group paper will address the Fed in context and connection with these others institutions and issues. More details will follow on this 8-10 page paper.

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Special Considerations

Obviously, this is a unique class. With live streaming of all the classes, media presence, security, and other issues, it is crucial that you be on class and in your seats no later than 12:45. Frankly, you should plan to be in your seats by 12:40 so you have a margin of error. The doors will close by 12:45 and if you arrive later than this, you will be directed to a room where you can watch a live stream feed. This is not meant to be draconian; it is simply that others wanting to benefit from the class - both inside the classroom and via the streaming - will be disrupted if you are late. Also, please plan on being in your seats until five minutes after the class ends to allow for film feed shutoff. Similarly shut off your cell phones and any other devices that can make noise. So please take extra care to be respectful of others' opportunity to benefit from the course. There is no formal dress code. You do not need to be in business attire; dress as you would for other classes, but please dress respectfully as well. We'll talk about this more in class.

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Spring Break Reading List

  1. Federal Reserve Bank San Francisco, "What is the Fed?"
  2. Federal Reserve Bank of Dallas, "Everyday Economics" http://dallasfed.org/educate/everyday/ev8.html
  3. The Federal Reserve Bank of San Francisco, "The Nation's Central Bank" http://www.frbsf.org/publications/federalreserve/fedinbrief/central.html
  4. Federal Reserve Education.org, "Fed Basics" http://www.federalreserveeducation.org/faq/topics/fed_basics.cfm
  5. SIFMA - Securities Industry and financial Markets Association, "US Financial Services Industry: Contributing to a more competitive economy", July 2010 http://www.ita.doc.gov/td/finance/publications/U.S.%20Financial%20Services%20Industry.pdf
  6. Governor Bernanke, "Implementing Monetary Policy." March 30, 2005 http://www.federalreserve.gov/boarddocs/speeches/2005/20050330/default.htm
  7. Chairman Bernanke, "The Benefits of Price Stability" , February 25, 2006 http://www.federalreserve.gov/newsevents/speech/bernanke20060224a.htm
  8. About the FOMC (Federal Open Market Committee) http://www.federalreserve.gov/monetarypolicy/fomc.htm
  9. Governor Tarullo, "Unemployment, the Labor Market and the Economy", October 20, 2011 http://www.federalreserve.gov/newsevents/speech/tarullo20111020a.htm
  10. Governor Duke's speech, "Come With Me to the FOMC - 10/19/2010 http://www.federalreserve.gov/newsevents/speech/duke20101019a.htm
  11. Duvvuri Subbarao, Finance & Development, "Redefining Central Banking", June 2010 http://www.imf.org/external/pubs/ft/fandd/2010/06/subbarao.htm
    • Optional Additional Reading to Subbarao: Alan Blinder, "How Central Should the Central Bank Be?" Journal of Economic Literature 48:1(2010):123-33. www.relooney.info/0_New_7345.pdf
  12. McKinsey Quarterly, Economic conditions snapshot, December 2011, Global Survey results http://www.mckinseyquarterly.com/Economic_Conditions_Snapshot_December_2011_McKinsey_Global_Survey_results_2905 Register to read here: http://www.mckinseyquarterly.com/home.aspx
  13. McKinsey Quarterly, Financial Services Practice, "Why US banks need a new business model", January 2012 http://www.mckinseyquarterly.com/Why_US_banks_need_a_new_business_model_2909 Register to read here: http://www.mckinseyquarterly.com/home.aspx

References

  1. http://www.federalreserve.gov/monetarypolicy/default.htm has a left navigation option "policy tools" with links to and descriptions about  
    • Maturity Extension Program and Reinvestment Policy
    • Open Market Operations
    • Discount Rate
    • Reserve Requirements
    • Interest on Required Reserve Balances and Excess Balances
    • Term Asset-Backed Securities Loan Facility
    • Term Deposit Facility
    • Expired Policy Tools
  2. Federal Reserve Systems: Purposes and Functions http://www.federalreserve.gov/pf/pf.htm
  3. Federal Reserve Bank San Francisco, FRBSF "Crisis and Response" website. http://www.frbsf.org/econanswers/

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Course Schedule

All reading to be completed by the indicated date
Introduction
March 6 Pre-Class Orientation   
Anoma Kulathunga & Timothy Fort
March 8 Pre-Class Orientation Anoma Kulathunga & Timothy Fort
Spring Break: Introductory Materials on the FRS distributed for review over Spring Brea
The Federal Reserve System: The Chair's View
March 20 Introductions Timothy Fort

Fundamentals, History, and Principles of Central Banking Ben Bernanke
March 21 Lab Session 6:00 PM - 6:50 PM Duques Room 356
March 22 Pre-Crisis Issues
Assigned Reading:
Chairman Ben S. Bernanke, "Four questions about the financial crisis ", Speech at the Morehouse College, Atlanta, Georgia, April 14, 2009 http://www.federalreserve.gov/newsevents/speech/bernanke20090414a.htm
Ben Bernanke
March 27 Response to the Financial Crisis
Assigned Reading:
Chairman Ben S. Bernanke, "The Effects of the Great Recession on Central Bank Doctrine and Practice", at the Federal Reserve Bank of Boston 56th Economic Conference, Boston, Massachusetts, October 18, 2011 http://www.federalreserve.gov/newsevents/speech/bernanke20111018a.htm
Ben Bernanke
March 29 Future Challenges
Assigned Reading:
Chairman Ben S. Bernanke, "The Effects of the Great Recession on Central Bank Doctrine and Practice", at the Federal Reserve Bank of Boston 56th Economic Conference, Boston, Massachusetts, October 18, 2011 http://www.federalreserve.gov/newsevents/speech/bernanke20111018a.htm
Ben Bernanke
April 3 General Reflections on Bernanke Sessions 1 and 2 Pamela Labadie & Chao Wei
April 4 Lab Session 6:00 PM - 6:50 PM Duques Room 356
April 5 General Reflections on Bernanke Sessions 3 and 4 and Lecture on Behavioral Finance
Assigned Reading:
Psychology and the Financial Crisis of 2007-2008 http://faculty.som.yale.edu/nicholasbarberis/cp10.pdf Nicholas Barberis, Yale School of Management.
Isabelle Bajeux-Besnainou
The Federal Reserve in Context
April 10 Constitutionality & Independence of the Fed
Assigned Reading:
  1. Morrison v. Olson, (U. S. Supreme Court 1988) http://scholar.google.com/scholar_case?case=17629076715773250697&hl=en&as_sdt=2&as_vis=1&oi=scholarr
  2. Free Enterprise Fund v. Public Company Accounting Oversight Board, (U.S. Supreme Court 2010) http://scholar.google.com/scholar_case?case=17629076715773250697&hl=en&as_sdt=2&as_vis=1&oi=scholarr
  3. Eight Articles - To Be Emailed or links provided
    1. Am. Banker Article re Conflicts of Interest at the Fed 10.20.11
    2. Bloomberg Article re Conflicts of Interest at New York Fed 5.8.09
    3. Excerpts from Wilmarth Article on CFPB and Regulatory Capture 12.22.11
    4. NYT Article re Fed and Subprime Financial Crisis 12.18.07
    5. NYT Article re Fed Chairman Bernanke's Testimony before FCIC 9.3.10
    6. NYT Article re New Fed Approach to Regulation 6.4.10
    7. Wash. Post Article re Fed and Subprime Financial Crisis 9.27.09
    8. Wash. Post Article re Fed and Subprime Financial Crisis 12.21.09
Todd Peterson & Art Wilmarth

April 12 Transparency, Auditing, & the Fed's Future
Assigned Reading:
  1. Laurence Meyer, "The Politics of Monetary Policy: Balancing Independence and Accountability." Remarks by Governor Laurence H. Meyer At the University of Wisconsin, LaCrosse, Wisconsin, October 24, 2000; http://www.federalreserve.gov/boarddocs/speeches/2000/20001024.htm
  2. Matthew Yglesias, "Fed Up: The Federal Reserve is shrouded in obscurity. That's partly its fault-- but it's partly progressives' fault, too." Democracy, 20 (Spring 2011): 64-74. http://www.democracyjournal.org/20/fed-up.php?page=all
  3. Annie Lowery, "End the Fed? Actually, Maybe Not." February 6, 2011. http://www.slate.com/articles/business/moneybox/2011/02/end_the_fed_actually_maybe_not.html
  4. Sarah Binder, "Will Congress Ever Reform the Fed?" Brookings Institution. May 12, 2010. http://www.brookings.edu/opinions/2010/0512_fed_binder.aspx
  5. Sarah Binder and Mark Spindel, "The Fed Uncloaked." Brookings Institution, December 20, 2010. http://www.brookings.edu/opinions/2010/1207_fed_binder.aspx
Art Wilmarth, con't & Sarah Binder
April 17 The Fed's Regional Work
Assigned Reading:
  1. Lusardi, Annamaria, Olivia Mitchell and Vilsa Curto, "Financial Literacy Among the Young," Journal of Consumer Affairs, vol 44 (2), 2010. http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2010.01173.x/abstract
  2. Campbell, John, Howell Jackson, Brigitte Madrian and Peter Tufano, "Consumer Financial Protection," "Journal of Economic Perspective, vol 25(1), 2011. http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.1.91
Anthony Yezer
April 24(a) The Sociology of Finance
Assigned Reading: TBD
Doug Guthrie
Global Considerations
April 24(b) China's Place in International Monetary Issues
Assigned Reading: TBD
Doug Guthrie
April 26 The European Crisis
Assigned Reading:
  1.  The Economist Special Report: "Europe And Its Currency", Nov 12, 2011. (Make sure your read all 8 articles in the survey: Staring Into The Abyss, A Very Short History Of The Crisis, Destructive Creation, In Theory, Beyond The Fringe, The Nico And Angela Show, Look At It This Way, Making Do). http://www.economist.com/node/21536872
  2.  Financial Times Video, "ECB's Fire Hydrant Funding", March 1, 2012. http://video.ft.com/
  3.  The Economist, "No Drama, But A Whole Heap Of Uncertainty," March 2, 2012. http://www.economist.com/blogs/charlemagne/2012/03/european-summit
  4.  The Economist, "Germany and Greece: Wolfgang's Woes," Feb 20, 2012. http://www.economist.com/blogs/charlemagne/2012/02/germany-and-greece
  5.  Financial Times, "Thinking the Unthinkable on a Euro Break-up," Nov 27, 2011. http://blogs.ft.com/gavyndavies/2011/11/27/thinking-the-unthinkable-on-a-euro-break-up/#axzz1oCZDnUMs
  6.  McKinsey Quarterly, "Why Europe Lags Behind The United States In Productivity", October 2011. https://www.mckinseyquarterly.com/Why_Europe_lags_behind_the_United_States_in_productivity_2684
  7. How Did the Central Banks in the U.S. and Europe React to the Global Financial Crisis? http://blogs.law.uiowa.edu/ebook/uicifd-ebook/part-5-v-how-did-central-banks-us-and-europe-react-global-financial-crisis
  8. University of Iowa, International Financial and Development, "The European Sovereign Debt Crisis POSTERS," February 24, 2012. http://blogs.law.uiowa.edu/ebook/uicifd-ebook/poster-presentation-european-sovereign-debt-crisis
  9. Financial Times Video, "How To Read Draghi And Bernanke", Feb 29, 2012. http://video.ft.com/
  10. 10. McKinsey Quarterly, "Globalization's Critical Imbalances", June 2012. https://www.mckinseyquarterly.com/Globalizations_critical_imbalances_2624
  11. Financial Times, "A Global Experiment in the Fiscal/monetary Mix," Feb 19, 2012. http://blogs.ft.com/gavyndavies/2012/02/19/a-global-experiment-in-the-fiscalmonetary-mix/#axzz1oCbSJj8m
  12. McKinsey Quarterly, Financial Services Practice, "In Search Of A Sustainable Model For Global Banking," Sept 2011. https://www.mckinseyquarterly.com/PDFDownload.aspx?ar=2859
Scheherazade Rehman
May 1 Central Banking and The Peace Accelerator
Assigned Reading:
Business and Peace: Sketching the Terrain http://auapps.american.edu/~oetzelj/JBEPTCSketchingtheTerrain.pdf
Timothy Fort
May 2 Lab Session 6:00 PM - 6:50 PM Duques Room 356

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