Question: Some critics argue that the Federal Reserve stoked the housing

Some critics argue that the Federal Reserve stoked the housing price bubble after 2000 by keeping monetary policy too simulative. To investigate, first plot from 2000 to 2007 on a quarterly basis the Taylor rule gap – the difference between the Taylor rule and the federal funds rate – as described in Chapter 18 Data Exploration Problems 1 and 2. Add to this plot on the right scale an index of U.S. housing prices (FRED code: SPCS20RSA).Does the evidence support the critics’ claim? What other evidence might be sought?


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  • CreatedOctober 02, 2014
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