Unemployment and Monetary Policy
Unemployment and Monetary Policy; Taylor Rule
In this box you will connect the earlier labor market box to monetary policy before, during, and after the financial crisis.
In the earlier box you looked at the unemployment rate for the 2006-2016 period. Now you are going to add inflation and the Fed Funds Rate (the benchmark interest rate of the US).
– Go to BLS.gov and look for 1) the Unemployment Rate, and 2) the Consumer Price Index (inflation).
– Get the Effective Federal Funds Rate from the St. Louis Federal Reserve Bank FRED database
The relation between interest rates, unemployment, and inflation is clearly stated in the Federal Reserve document accompanying these instructions.
In the box you have to document and explain these three indicators during the Great Recession; make sure you plot the variables separately.
(1300-1500 words)
Required Texts
Davis, Morris, Macroeconomics for MBAs and Masters of Finance, Cambridge University Press
ISBN-13: 978-0521762472
ISBN-10: 052176247
Chapter 6 in the Davis textbook.
Grading metrics attached.
https://fred.stlouisfed.org/se
Solution preview for the order on unemployment and monetary policy
