Department of Finance

Dr. Tayyeb Shabbir Sum I, 2017

FNCE 101: Monetary Economics and Global Economy

FNCE 613: Macroeconomics and Global Economic Environment

Class Meeting Information: JMHH 250 T/R 9:00 am – 12:30 pm

Instructor’s Office/Hours: 2429 SHDH; Tuesdays and Thursdays 3:30 p.m. – 5:00 p.m.
Email: shabbir@wharton.upenn.edu

TA Office Hours: Ewelina Zurowska; 2331 SHDH; on Mon & Wed 2:30 p. m. – 3:30 p.m.
Email: ewelina@wharton.upenn.edu

Objective of the Course:

The main objective of the course is to provide the student essential analytical tools that
will allow a comprehension of the core theoretical ideas in Monetary and Macroeconomics and
their policy applications. The classroom lectures and discussions will describe the workings of
the relevant markets – the various assets, the goods, the labor and the foreign exchange markets.
The course will primarily focus on the nature of the business cycle, its determinants and, in
particular, the role of monetary and fiscal policies both domestically as well as in a global
context with a special emphasis on the 2007-08 Global Financial Crisis that precipitated the
Great Recession of 2008-09 and its aftermath leading up to the current situation. The students are
encouraged to read publications such as the Wall Street Journal, The Economist and the
Financial Times to stay abreast of the relevant domestic as well as global macroeconomic and
monetary developments.

Course Material and Resources:

• Text Book and MyEconLab:

The students are required to purchase the following course material which is available in

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 the Penn Bookstore as a single package. One may choose between the Loose-leaf version
and the E-Text version – both versions will have the Access codes for MyEconLab
(MEL) that we will use in this course. Instructions to register for MEL will be posted as
an Announcement in Canvas. Thus one may choose one of the following packages:

Option 1:
Macroeconomics 9th edition by Abel et al.
Loose-leaf text + MyEconLab with eText = ISBN 9780134472560

Option 2- Digital:
Macroeconomics 9th edition by Abel at al.
MyEconLab with eText = ISBN 9780134143187

If you have any difficulty locating the package of your choice, please check with Shane Siefke,
Textbook Manager or email me at shabbir@wharton.upenn.edu.

Incidentally, the formal description of the text book alone is as follows:

Macroeconomics by Abel, Bernanke and Crushore. Prentice Hall/Pearson. 9/e, 2017.

• Online Resources:

o Canvas Course Site. It is the most critical resource and will be used extensively.
All lectures and other relevant material (including Discussion Boards, assignment
deadlines etc.) will be posted on Canvas and it will be the essential dashboard for
navigating the course. Please set your Canvas notifications settings to ASAP. It
will be your responsibility to be aware of all Canvas posts in a timely
manner.

o Online Economics and Finance Dictionary: www.investopedia.com/dictionary

• Recommended Journals/Newspapers Readings:

o Every Week, browse through at least two of the following publications (available
free via Penn library – consult a reference librarian) for articles pertinent to the
theme of this course. You may bring the ones you like the best to my attention via
email so that I may consider sharing them with the rest of the class.

Wall Street Journal www.wsj.com

Financial Times www.ft.com
Bloomberg BusinessWeek www.bloomberg.com/businessweek
Economist www.economist.com

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FAQs

I: Classroom Experience

• As your instructor, my goal is to do my best to make this a wonderful learning experience

for you. However, I do expect that each of you will do your part in maintaining an
environment which is conducive for learning in a relaxed yet intellectually stimulating
manner. There are simple dos and don’ts which are essential in order to maintain good
learning environment - no coming late, leaving early, talking amongst yourself etc.
Following are a few of the things that I would like to bring to your attention specifically.

• Will Canvas be used?

o As mentioned already, Course’s Canvas site will be the central location for all
course material, syllabus, lecture PPTs, assignments and their due dates and other
important announcements/posts regarding this course. Please be reminded to set
your Canvas notifications settings to ASAP.

• May students use laptops and mobile devices in class?

o Yes, for the purposes of viewing class materials. However, any misuse (such as
texting or viewing material unrelated to the course) may result in revocation of
this privilege.

• What about class participation/attendance?

o Absolutely expected. There will be many opportunities for interaction about the
class material including In-class break-out sessions.

• May students eat food in class?

o No solid food, only water and soft drinks.

• What are the consequences for lateness or early departure?

o Arriving late or leaving early often will distract the class and generally reflects
poorly on student motivation. Such and other potentially disruptive behavior has
significant negative externalities in terms of learning environment so I want to
discourage this very seriously and caution you that it will adversely affect your
grade. Instead, I want to encourage you all to be great ‘citizens’ and I am
confident that you will be.

• Do you expect name tents to be used?

o Yes.

• What is the nature of class meetings, duration of lectures?

o Each class meeting time is 9:00 am -12:30 pm. I will have a break of about 10
minutes of so midway. The class meeting will generally comprise of a lecture
about the core analytical material with time set aside for a discussion about policy
applications and current events. Your class participation will be sought and is
highly encouraged. Remember, learning is a contact sport – participate! You may

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 raise questions as well as share your own observations. Please feel free to ask
questions during the class, right after it or during your visits to my office hours.

• How can I be ready for class?

o Read before you come in and pay attention to the Canvas posts and schedule for
the course.

• How can I do well in the exam?

o Come to class regularly, read before and after the class, interact with the TAs and
the professor during the office hours and take care of all the assignments in a
timely fashion.

COURSE REQUIREMENTS AND GRADING:

The course grade will be based on the following:

Rel. Wt.
1. Midterm Exam 40 % .
2. Final Exam (Non- cumulative) 40 %
3. In-class “Surprise” Quizzes (5 or 6) 5%
4. Weekly Online Discussion Participation 5%
5. Web Reports 5%
6. Home Work (My Econ Lab or MEL) 5%

Special Note:

1. There will be no make-up exam for the missed Midterm exam; instead, for pre-approved
absences for University determined valid reasons, the relative weight of the Final Exam may
be proportionately increased. A Final exam, if postponed for valid University reasons and with
instructor’s prior approval, will be given only in the first week of the Fall semester during the
official date for such cases. However, I very strongly believe that it is best to take these exams
when scheduled.

Important Notes about Exams and other course requirements:

• Exams:

Exams – Relative weights and Make-up Policy: This category will carry a total
80% weight towards your course grade. As mentioned above, there will be no
make-up exam for the missed Midterm exam; instead, for pre-approved absences
for University determined valid reasons, the relative weight of the Final Exam
may be proportionately increased. The final exam can be rescheduled only if
explicitly permitted by University policy and pre-approved by the instructor, and
will be given only during the official ‘make-up exam’ period which for the

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 summer semester courses is end of August (when school restarts for the Fall
semester). Such rescheduling of final exam can be due to only a University-
approved reason which is documented fully and in a timely fashion. In case of
serious illness/accident on the final exam day, you must notify the professor
before the exam begins if possible but do so as soon as feasible and must provide
official documentation from a doctor in a timely manner.

o Admittance and Proof of attendance: You will need your University ID to be

admitted to your exam. To record attendance, there will be a sign-up sheet and the
teaching staff may film the classroom during an exam.

o Disability Accommodation: Disability accommodations will be provided by

Penn’s Student Disability Service (SDS). To be eligible, you must notify me or
make sure that the SDS office has notified me on your behalf via email as soon as
the semester starts that such accommodations are needed and provide the proof of
eligibility. The exam will be scheduled during the time of the regular exam or
right before the exam and may be proctored by the office of the Student Disability
Service. Any request for a required alternate exam arrangement exam for
disability accommodations must be made at least one week before the exam’s
start date.

o Exam Dates:

They are noted later in the syllabus.

o Exam Coverage: It is noted in the syllabus. The final will be non-cumulative.

o Style of Exams: Generally speaking, the each exam will be a mix of following
types of questions: MC (30%), numericals (30%) and brief analysis with the help
of diagrams (40%). These percentages are subject to change and are being
provided for general guidance only and should not be interpreted as strict
commitments.

o Cheat Sheets and other allowed/disallowed items: All exams will be closed book,
closed notes and must be attempted individually without any help from any other
electronic source/person. Only non-programmable calculators may be used. No
cheat sheets of any kind will be allowed.

o Exam Regrade Policy and Procedure: Any requests for regrading of exams must
be submitted in writing within one week from the date that exams are returned in
class, and must be accompanied by the official Regrade Request form and
Statement of Honesty in Regrade Request form, which are available on Canvas.
The one-week period for submission of exams for regrading begins on the date
that the exams are returned in class, not on the date that you pick up the exam in
case for some reason, you are absent from class the day the exams are returned. If
you miss the class during which the exams are returned, it is your responsibility to

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 pick up your graded exam in time to submit a regrade request within the requisite
one-week period. For the final exam, requests must be made within one week
from the first day of classes the following semester. Any alteration of the exam is
strictly forbidden and will be considered a violation of the Code of Academic
Integrity. Requests for regrading must be very specific. Do not mark or make
notes on your exam, and do not alter in any way the answers to the questions.
Such alterations will be construed as violations of the Code of Academic Integrity
and will be referred for disciplinary action. Please review the Code of Academic
Integrity at:
http://www.upenn.edu/academicintegrity/ai_codeofacademicintegrity.html.
Further, when you request a regrade, I retain the right to decline to regrade your
exam without stating any reason if in my judgment there is evidence of
overwriting and redrawing of graphs etc. This has worked best for insuring fair
play as well as perception of the same. Thus, while in the actual exam, you are
free to write over and redraw after scratching out graphs, please be aware that this
may become a factor if a regrade request is to be made later on.

• MEL Problem Sets: You will be able to access these via “My Lab and Mastering” tab
right from Canvas. There are problem sets for most of the chapters and you need to keep
track of the due dates via Canvas. You can have up to three attempts before you decide
to submit for grade. Each incorrect response will be provided with learning feedback.
Thus these problem sets are great learning tools and should help you to prepare for
exams as well. In terms of grades, this category will count for 5% of the course grade
and your raw scores will be adjusted to give you a 25 % bonus. For example if the total
problems for the course are 100 points scoring 75 or more will constitute full credit.

• In-class “Surprise” Quizzes/Class participation: There will be 5 - 6 quizzes, they will

be graded and can only be taken in class. You will do these quizzes in groups of two.
These will also provide a chance to learn via collaboration as well as promote ‘good
citizenship’. Along with other assignments and assigned work, they will be a very good
preparation for the exams too.

• Web Reports: There will be three web reports for 10 points each. Their nature and
“rubric” is described later in this syllabus.

• Weekly Online Discussion Participation: There will be 5 such weekly online

discussion assignments for 10 points each. The idea is for you to start with a primary post
on topics that will be provided by me and then you will be able to see what other
classmates have posted. You will be expected to engage in a collegial discussion by
responding to several of these posts – at the minimum 3 or 4 and these contributions
ought to be spread over time and need to be substantive vs. merely comments such as
“Good job”, “Great post” etc. Each Discussion assignment will have its individual
prompts that will be posted for a limited time and there will be due dates noted in Canvas.

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COURSE OUTLINE

The purpose of this summary is to help you see class meeting as well exam schedule.
However, as a rule, the course site in Canvas will have the most current and relatively the
most detailed course-related information, so please pay close attention to Canvas starting
with setting alert preferences to ASAP or daily. Though not expected to happen in any
substantial manner, throughout the course, these items may be changed or their relative
emphasis re-arranged at the discretion of the instructor

PART I: INTRODUCTION (Part I (0.5 lecture) ends T 5/23)

1. Introduction to Monetary Economics Chapter 1

2. Measurement of National Output Chapter 2

MEL Assignment Available Due

MyEconLab 1 HW Assignment Ch. 2 5/23/2017; 5:00 am 5/28/2017; 11:00 pm

Web Report # 1 (due: R; 5/25/17) After surfing www.bea.gov for about half an hour, prepare a
one page single-spaced typed report describing three items that you found of interest. Also,
include a brief personal commentary on the contents and/or the web site. The report will need to
be uploaded to Canvas. A class discussion will also be held the day the report is due.

Topic # 1: Mysteries of the GDP Measurement (Hand Out or H. O. # 1)

Topic # 2: CPI-based Inflation Rate: Problem and Solutions (H.O. # 2)

PART II: MARKETS, MARKETS, EVERYWHERE (2.5 lectures; section ends T 5/30)

3. Labor Market and Trend Growth Chapter 3

MEL Assignment Available Due

MyEconLab 2 HW Assignment Ch. 3 5/23/2017; 5:00 am 5/31/2017; 11:00 pm

4. Introduction to Bonds, Stock and Money Markets.

Money (Asset) Market Equilibrium Chapter 7
Central Banking System (FED) Chapter 14 (14.1-14.2)

MEL Assignment Available Due

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 MyEconLab 3 HW Assignment Ch. 7 5/23/2017; 5:00 am 6/4/2017; 11:00 pm
MyEconLab 4 HW Assignment Ch. 14a Ditto Ditto

5. Goods Market Equilibrium Chapter 4,

Fisherean Model (Appendix 4.A)

MEL Assignment Available Due

MyEconLab 5 HW Assignment Ch. 4 5/23/2017; 5:00 am 6/6/2017; 11:00 pm

PART III: GENERAL EQUILIBRIUM MODEL OF THE ECONOMY (IS-LM-FE

FRAMEWORK) (2 lectures; ends T 6/6)

6. G. E. Framework (IS-LM-FE) Chapter 9 (except section 9.6);

Numerical Illustration (App. 9.A)

MEL Assignment Available Due

MyEconLab 6 HW Assignment Ch. 9a 5/23/2017; 5:00 am 6/7/2017; 11:00 pm

MIDTERM EXAM: Monday June 12, 2017 11:00 am – 12:30 pm Room TBA
(Course Coverage: Reading List Items 1 – 6).

7. Nature of Business Cycle Chapter 8 (except 8.4); (H. O. # 3)

MEL Assignment Available Due

MyEconLab 7 HW Assignment Ch. 8 5/23/2017; 5:00 am 6/13/2017; 11:00 pm

Web Report # 2 (due: T; 6/13/17). After surfing www.nber.org/cycles.html and

http://www.nber.org/cycles/sept2010.html for about half an hour, prepare a one page single-
spaced typed report on how the NBER determines the turning points of the business cycles in the
U. S. Also, include a brief personal commentary on the topic. Upload report to Canvas. A class
discussion will also be held the day the report is due.

PART IV: MODELS OF BUSINESS CYCLES AND THEIR POLICY

IMPLICATIONS (2.5 lectures; section ends T, 6/20)

8. The Classical Model Chapter 10 (except 10.3)

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 RBC Model (H. O. # 4, 5)

MEL Assignment Available Due

MyEconLab 8 HW Assignment Ch. 10 5/23/2017; 5:00 am 6/18/2017; 11:00 pm

9. The Keynesian Model Chapter 11

(H. O. # 6)

MEL Assignment Available Due

MyEconLab 9 HW Assignment Ch. 11 5/23/2017; 5:00 am 6/21/2017; 11:00 pm

10. Fiscal/Monetary Policy Implications of the

Classical and Keynesian Models
FED Policy during GFC (2008) and Current Situation

Chapter 9 (section 9.5)

Chapter 15 (sections 15.1-15.3)
Chapter 14 (sections 14.3-14.5)
Chapter 10 (sections 10.4-10.5)
Chapter 11 (section 11.3)

MEL Assignment Available Due

MyEconLab 10 HW Assignment Ch. 9b 5/23/2017; 5:00 am 6/23/2017; 11:00
MyEconLab 11 HW Assignment Ch. 14b Ditto pm
MyEconLab 12 HW Assignment Ch. 15 Ditto Ditto
Ditto

Topic # 3: What we do or don’t know about Macroeconomic Policy Making

(H. O. # 7)

Web Report # 3 (due: R; 6/22/17). After surfing http://www.federalreserve.gov for about half an
hour, prepare a one page single-spaced typed report about the functioning of the Federal Reserve,
in particular, its conduct of the monetary policy in response to the Global Financial Crisis of
2007-09, and its currently ongoing transition towards normalization of monetary policy after the
end of the so called “Quantitative Easing” policy. Include a brief personal commentary as well.
Upload report to Canvas. A class discussion will also be held the day the report is due.
READINGS: Monetary Policy and Credit/Financial Crisis (iii) – (v) are required while (i)
and (ii) are optional.

(i). U.S. Monetary Policy: An Introduction:

(a) http://www.frbsf.org/publications/federalreserve/monetary/index.html

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(ii). U.S. Monetary Policy during the 1990s
(a) http://www.nber.org/digest/dec01/w8471.html

(iii). Anatomy of the Global Financial Crisis of 2008-2009:

(a) “Anatomy of America’s Subprime Mortgage Crisis of 2007-08: Channels of
Contagion”, by Tayyeb Shabbir. Published in Refereed Conference Proceedings of the
Global Academy of Business and Economic Research, Houston, March, 2008. Re.: H. O.
# 8 (In Handouts Folder).
(b) http://www.soas.ac.uk/cdpr/publications/dv/50940.pdf
(c) http://www.stanford.edu/~chadj/CurrentEvents2009.pdf

(iv). FED’s QE policy towards the Global Financial Crisis of 2008-2009

(a) http://www.globaleconomiccrisis.com/blog/archives/tag/federal-reserve
(b) http://news.bbc.co.uk/2/hi/business/7934920.stm

(v). Fed Maps Exit from Stimulus—Normalization and beyond

(a)
http://online.wsj.com/article/SB10001424127887324744104578475273101471896.html
(b) Yellen: Normalizing Monetary Policy: Prospects and Perspectives March 2015
http://www.calculatedriskblog.com/2015/03/yellen-normalizing-monetary-policy.html

PART V: OPEN ECONOMY MACROECONOMICS (2.5 lectures; section ends T 6/27)

11. Open Economy Macroeconomics:

MP and FP, Currency Markets and
Currency/Financial Crises, Euro-Zone Financial Crisis.
Global Implications of FED’s ‘Rewinding’ and ‘Normalization’ of its Balance
Sheet.

Chapter 5 (5.1-5.2; (optional: 5.4)

Chapter 13 (13.1- 13.3 and class notes; 13.4 (optional)).

MEL Assignment Available Due

MyEconLab 13 HW Assignment Ch. 5 5/23/2017; 5:00 am 6/27/2017; 11:00 pm
MyEconLab 14 HW Assignment Ch. 13

Optional reading regarding the Global Imbalances:

1. “Role of the Middle Eastern Sovereign Wealth Funds in the current global financial
crisis”, by Tayyeb Shabbir in Topics in Middle Eastern and North African Economies, electronic
journal, Volume 11, Middle East Economic Association and Loyola University Chicago,
September, 2009, http://www.luc.edu/orgs/meea/volume11/PDFS/Paper-by-Shabbir.pdf

2. “Post-Global Financial Crisis Investment Strategies of China’s Sovereign Wealth Funds:

A Case Study of China Investment Corporation” by Tayyeb Shabbir in Sovereign Funds:
Fiscal Framework, Governance Structure & Investment (eds.) Donghyun Park and Ana Maria
Jul. Central Banking Publishers, London, UK. 2015. # 9 (In Handouts Folder).

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3. “Uneven Growth – short and long-term factors” IMF
https://www.imf.org/external/pubs/ft/weo/2015/01/pdf/text.pdf April, 2015.

FINAL EXAM: Wednesday, 6/28/2017; Final exam 10:30 pm – noon; Room TBA. Final
exam will be non-cumulative and will include the Reading List material covered since the
midterm exam.

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