Watch My Latest Lesson!

[Ed McKelvey]

Click here to view my lesson about The Floor That Wasn't .  I know it's long.  Would appreciate any other feedback.

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Ed McKelvey

Visiting Professor of Economics

Oberlin College

440-775-8857

210 Rice Hall

10 North Professor Street

Oberlin, Ohio. 44074

[Amyaz Moledina]

Dear Ed,

This is an excellent start! Way to take on a complicated and relevant topic. Here is some feedback: You start of really naturally. The ready axis is great. It saves time and keeps things clear. As I watched:

(0) At the beginning you explain the purpose of this exercise. "you want to explain how the floor did not exist.". This is nice. But you do not tell me why. You might want to preview the two reasons: The monopsony power of Government Sponsored Institutions and the fact the IOER policy was incomplete. I would make this explanation a simple bulleted slide.

(1) The explanation of bank excess reserves and the demand for excess reserves is great.

(2)  At around 2:40 you shift the demand for excess reserves down in response to the Fed action. Is that right? Is it not just a movement along?

(3) At 3:40 or so you are showing surplus. It may be clearer if you show the actual quantity of excess supply on the X axis by labeling it.

(4) At 6:00 or so when you explain the GSA, it gets fairly complicated. There are multiple concepts that would be difficult to digest. Monopsony, and market power etc could do with a little more elaboration. This is where I would break it down. So one thought is to split this into two videos. One that explains the IOER floor in the Fed Funds market and show how that works. Then create another video that explains the floor that wasn't.

Again, nice job! I really liked this.

Amyaz Moledina

[Ed McKelvey]

Amyaz,

 

Thanks for the feedback.  I agree with everything you say except point 2:

 

Consider that on any given day a bank can be on either the demand or the supply side of the market, depending on where it stands relative to its reserve requirements.  If the Fed increases the supply of reserves in an effort to drive the funds rate down, then more banks are apt to find themselves with an excess at any given rate and fewer are apt to find themselves with a shortage, also at any given rate.  Thus, both curves can shift, at least in principle.  That said, it might be less confusing to omit the shift in demand as it really isn’t essential to the story, I suppose.

 

I definitely think this is a Part I/Part II thing, as you suggest.

 

I found the conference to be really helpful.  I’m afraid that I was a free rider when it came to note taking, so I don’t have anything to post as far as notes are concerned.

 

Ed McKelvey

Visiting Professor of Economics

Oberlin College

440-775-8857

 

210 Rice Hall

10 North Professor Street

Oberlin, Ohio  44074

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[Joyce Burnette]

I found this video very informative, and I don't think it's too long.  I was thinking about the 5-minute limit, and I think it we stuck to that limit it would prevent us from studying anything in depth.  Lectures are 50 minutes, and it's not realistic to think we could replace them with 5-minute sound bites.

Joyce

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From: econe...@googlegroups.com [econe...@googlegroups.com] on behalf of Ed McKelvey [emck...@oberlin.edu]
Sent: Tuesday, July 02, 2013 4:41 PM
To: econe...@googlegroups.com
Subject: Watch My Latest Lesson!

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[Rajaram Krishnan]

Hi Ed:

I quite enjoyed the video. I agree with Joyce - I don't think the 5 minute rule is worth sticking to - not just for pragmatic reasons, but for pedagogical reasons. But that's a longer conversation and one I'm glad to partake in if others want to jump into the fray (Amyaz, I think on many a campus that would be a 'challenge'. At Earlham, it is an 'invitation'! :-))

I'll pass on the economics involved for now and just comment of the 'teaching' part. I wonder if being more active in the presentation is a useful teaching technique. As in, writing out some of the things you say. For example - Monopsony. Write out monopsony and say something like - "As you folks know from Micro, that means....sort of thing." That way throwing the visual and the auditory may make for better learning. Or am I just being biased by my teaching style?

But now I have a non-binding floor example to share with my students. Thanks!

Regards
Raja

[Ed McKelvey]

Hi all,

 

I’ve discovered that one benefit of lobbing in the first lesson is that you get multiple comments.  Having thought further about those I received as well as the 5 minute rule, I offer the following thoughts:

 

1.       I don’t think the 5-minute rule should be a straitjacket.  However, I do think that it’s easier to digest many small bites than fewer larger ones and therefore that brevity should be an objective.  I may have a unique perspective (bias??  infection??) in this regard, having dealt for years in the business world, where short attention spans put a high premium on getting to the point quickly.  I think in the educational context the issue boils down to identifying subjects that can be dealt with as a single module and then recording a video that does so as succinctly as possible while keeping the informality of leading the student through the lesson.  If that takes 10 minutes, so be it.   Ultimately, the students will render an opinion in how much they use and value the videos.

 

2.       In the case of my federal funds market lesson, I’ve concluded that a split into two (or possibly three) videos makes sense.  The first would focus on how this market works and how the Fed has used it in “normal” (pre 2008) times to set levels of short term interest rates.  With that background, a second one could then cover the IOER floor problem that was the initial motivation for this lesson (and a subject that intrigues me for the Fed’s eventual exit from the current situation).  The third one—logically #2 in the sequence—would be a parallel explanation for why the stigma of borrowing from the Fed prevents the discount rate from setting a ceiling on the funds rate.  Conceivably these last two could be combined—I’ll have to see.

 

3.       Using a stylus makes a big difference.  I certainly found that out when I made this video without one vs. the IS curve I did at our conference with one.  So I will first obtain a stylus, then try to redo the funds rate lessons as described above.  I also have in mind doing a video that explains the latest boom/bust cycle in the housing market.

 

4.       With regard to the economics of my funds market model, I remain convinced that both curves can move for the reason I gave before—a bank can be either a supplier or a demander of funds depending on how its reserves stack up against its requirements on any given day.  When the Fed changes the overall supply of reserves, say by increasing them, fewer banks end up on the demand side and more end up on the supply side.

 

5.       However, there is another flaw in my presentation.  The IOER should be a floor on both the demand and the supply sides of the market, counter to the way I drew it.  In principle, banks should be willing to borrow large sums of money from other banks at rates below IOER if they can turn around and earn IOER on bloated reserve positions.  Fixing this would help explain why the arbitrage ought to have worked with the GSEs and provide a better set-up for the monopsony situation that undercut the floor.

 

6.       I agree that additional writing and verbal explanation during the video (e.g., writing “excess supply”, “monopsony,” perhaps also “GSEs” on the screen as I bring these subjects up) would probably help keep students engaged and reduce the risk that you lose them.  I suggested as much to Joyce in my comment on her Keynesian equilibrium video.  Those and other comments have been very useful.

 

Ed McKelvey

Visiting Professor of Economics

Oberlin College

440-775-8857

 

210 Rice Hall

10 North Professor Street

Oberlin, Ohio  44074

 

From: econe...@googlegroups.com [mailto:econe...@googlegroups.com] On Behalf Of Rajaram Krishnan
Sent: Saturday, July 06, 2013 3:02 PM
To: econe...@googlegroups.com
Subject: Re: Watch My Latest Lesson!

 

Hi Ed:

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[Ed McKelvey]

Click here to view my lesson about The Boom/Bust Cycle In Housing.

Create and share amazing video tutorials with the free Educreations iPad app:
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