December 07, 2002


Financial Markets and Economic Fluctuations

Professor William R. Parke


This course examines in some detail the relation between financial markets and macroeconomics, focusing on how economic behavior by agents in financial markets might influence outcomes for other sectors of the economy. The particular topics studied include the institutional characteristics of financial markets, the unique role played by paper money, and supply and demand for financial securities.

The most important goal of this course is training advanced undergraduates to produce competent, informed analyses of important issues in economics. To promote this goal, this course requires a term paper that encourages students to shift from note taking toward active participation in their own education. The ability to produce a clear, concise report is much more highly valued in the world after graduation than is the ability to take notes.


Completion of Economics 132 and Economics 70 before this semester. (If you have not completed Economics 70, we can talk about that requirement. The Economics 132 requirement is less flexible.) Students should also have completed several other economics courses before taking this course.

Requirements and Grades

Each student will complete a term paper, two midterm exams, and a final exam. Grades are on a total points basis. I consider incompletes only under special circumstances (e.g. verifiable health problems) and will not award one simply to extend the due dates. The approximate point distribution will be term paper (30%), midterms (40%), and final exam (30%). In addition, the course requirements include progress reports and homework. While not graded on a formal points basis, the progress reports and homework are very important in my assessment of your efforts in this course. Failure to complete the course requirements, including the exams, the term paper, the progress reports, and the homework, in a timely fashion will result in a reduced or failing grade.

Required Reading

1. Frederic Mishkin, Money, Banking, and Financial Markets.
2. William R. Parke, Classic Economic Models,
3. The Wall Street Journal (Section C, "Money and Investing").
4. Course Web Site,
5. Course ListServ,

It is your responsibility to get signed up for the listserv and to keep up with postings to the web site. I will assume that you receive any information posted to the listserv or the web site. To sign up for the listserv, go to, click "visit", and choose econ185. Your name is not optional for this course because I will be checking to make sure you have signed up.

Posted by bparke at December 7, 2002 12:23 AM