George G. Kaufman
MBA 559 FED WATCHING AND MONETARY POLICY

Last Updated on November 18, 2003



Course Description

Through its monetary policy operations, the Federal Reserve is the most important economic policy making institution in the U.S. and possibly in the world. By affecting interest rates, money supply, and financial markets, Fed actions affect almost every household and business firm in the U.S. as well as in many other countries and its actions need to be incorporated in everyone's economic decision making. But to many, the Fed's intent and operations are cloaked in mystery. This course attempts to demystify the Fed by developing an understanding of its purpose, organization, function, and operations. In particular, the course attempts to identify Fed policy intent and predict its future courses of action by gaining an understanding of how the Fed affects the macroeconomy and analyzing past and current Fed monetary policy actions and the testimony, speeches, and other pronouncements by the Fed chairman and other officials. The primary focus will be on Fed activities occurring concurrently with the period the class is in session, including meetings of the Federal Open Market Committee and the development and implementation of the policy directives adopted. The new European Central Bank and other major central banks will also be discussed and their organization and operation procedures analyzed and compared with the Fed. Outside speakers from the Fed and financial institutions (Fed watchers) will be invited. Extensive use will be made of materials on the Internet at websites focusing on Fed actions and financial markets.

Potential Topics include

· Organization and structure of the Fed
· Role of the Fed in monetary policy
· Implementation of Fed stabilization policy
· Implications of Fed stabilization policies
· Models of Fed behavior
· Political economy of the Fed
· Federal Reserve political independence
· Signals of Fed policy
· Implications of greater Fed public disclosure of policy intent
· Predicting Fed policy
· Inflation targeting
Operating without Treasury securities
· Asset price bubbles
· Challenge of price deflation
· The European Central Bank and other major central banks

 

Materials Used

A basic textbook, supplemented by current material from the Internet, e.g., Fed speeches, Fed watcher comments, analyses of Fed actions, and from newspapers periodicals.

CoursePrimary Grade Weights
(subject to change with advance notice)

Final Exam ...................................40%
Mock FOMC Report .....................20%
Foreign Central Bank Project ........25%
Fed Funds Homework ..................10%
Class participation ..........................5%

Total ..........................................100%

559 Reading Assignments

559 Topic Outline


 
 

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Masters in Business AdministrationGraduate School of BusinessLoyola University Chicago
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