Problem set 3: On Credit

Due date: Friday 28th March, 8.00am

The essay question has been posted at http://groups.google.com/group/economaru/files

Name of file "EE432_test3.zip"

Topic 4: Credit and Banking

Reading pack is now available.
http://groups.google.com/group/economaru/files
Lecture note is being expanded, so the complete version will be uploaded later.

I've decided to include only 2 articles in the reading pack this time. These are:
Bernanke and Blinder (1988) "Credit, Money and Aggregate Demand" AER
Diamond and Dybvig (1983) "Bank Runs, Deposit Insurance, and Liquidity" JPE
The first article is technically easier and may be useful for subsequent materials, so should be the priority reading.

Solutions to problem set 2 (topics 2 and 3)

...have been uploaded to the usual place:
http://groups.google.com/group/economaru/files

File name "EE432test2_Answers.zip"

Note: These solutions are geared towards clarifying the maths elements of the questions, so details about the economics involved are often omitted. In exams, you may want to put on the 'economics hat' more often, while you may skip explaining the unimportant maths details (as long as the end result is correct!).

Happy revision, and good luck with all your exams!