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Teaching of the Basic Money and Financial Institutions Course
Published online by Cambridge University Press: 19 October 2009
Extract
Like any course, the basic money and financial institutions course, or money and banking as it is more frequently designated, takes on the unique coloration of the instructor. However, this course appears to be so affected more than most other finance and economics courses at this level. This occurs because, although it is a second course, it is still a very broad course in design, and more importantly, because it encompasses the three approaches to the teaching of economics and finance–description, theory, and policy. Different instructors emphasize different aspects, at times, to the almost total exclusion of one or both of the other two. But, judging from the financial failure of textbooks that have attempted to focus on just one of these aspects, say, financial institutions or monetary economics, it appears that most instructors prefer the broader and more diffuse coverage. And so do I.
- Type
- IX. Teaching of the Basic Money and Financial Institutions Course
- Information
- Journal of Financial and Quantitative Analysis , Volume 11 , Issue 4 , November 1976 , pp. 607 - 612
- Copyright
- Copyright © School of Business Administration, University of Washington 1976
References
1 The failure to remove the shroud of mystery from the financial sector should rank among the more important failures of economic education. John Stuart Mill noted some 125 years ago that
Confusion… envelopes the whole matter; partly from a lingering remnant of…misleading associations, and partly from the mass of vapoury and baseless speculation with which this, more than any other topic of political economy, has in latter times become surrounded.
Little has been achieved since to clarify the public image of money and finance.
2 In fact, the complete specification of LM-IS models and the analyses of the implications are only now appearing in the professional journals, in particular in a series of articles by Laurence H. Meyer. See, for example, “Wealth Effects and the Effectiveness of Monetary and Fiscal Policies,” Journal of Money, Credit, and Banking, November 1974, pp. 481–502Google Scholar, and “The Interest-Induced Wealth Effect and the Behavior of Real and Nominal Interest Rates: A Comment,” Journal of Finance (forthcoming). Another problem, of course, is the possibility of a positively sloped IS function.
3 Silber, William L., “Fiscal Policy in IS-LM Analysis: A Correction,” Journal of Money, Credit, and Banking (November 1970), pp. 461–472.CrossRefGoogle Scholar
4 Ritter, Lawrence S. and Silber, William L., Principles of Money, Banking and Financial Markets (New York: Basic Books, 1974), p. 169.Google Scholar
5 In the LM-IS model developed by Meyer, some wealth effects produce shifts in the IS function while others, including interest induced effects, alter the slope of the function.
6 I am indebted for this point to Joseph Bisignano of whom this question was asked by an overly inquisitive student.