For this module, please review the list of research topic options attached below. Research the topic associated with the first letter of your last name. Prepare a brief report (1-2 pages) that you will submit by the end of this module.
Research data:
The Federal Reserve Bank of St. Louis maintains economic data in a system called Federal
Reserve Economic Data or FRED. This web site is located at
http://research.stlouisfed.org/fred2/. Please explore this web site; it contains a wealth of
economic data on the economy, interest rates, and banking. Most of the research projects will
require data that is available from this website where you can either copy a graph that you create
or download data to Excel for further analysis.
Plot the Taylor Rule since 1990 on a quarterly basis (similar to Figure
18.9). For the output gap, use the percent deviations of real GDP (FRED code: GDPC1) from
potential output (FRED code: GDPPOT). For inflation, use the percent change from a year ago
of the price index for personal consumption expenditures (FRED code: PCEPI). Assume that the
long-run risk-free rate averages 2 percent and the target inflation rate is 2 percent. When
complete, compare the Taylor Rule rate against the actual federal funds rate (FRED code:
FEDFUNDS) after 2007.
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