Go to the St. Louis Federal Reserve FRED database, and find data on corporate net worth of
Question:
a. Calculate the average growth rates over the most recent four quarters of data available for the corporate net worth and private domestic investment variables. Calculate the difference between the value of the stress index during the most recent quarter and the value of the stress index one year earlier. Comment on the relationships among financial stress, net wealth of corporate businesses, and private domestic investment.
b. Repeat part (a) for the four quarters of 2005 and for the period from 2008:Q3 to 2009:Q2. Comment on the relationships among financial stress, net wealth of corporate businesses, and private domestic investment before and during the crisis as they relate to your results. Assuming the financial stress measure is indicative of heightened asymmetric information problems, comment on how the crisis-period data relate to the typical dynamics of a financial crisis.
c. How do the current investment data compare to the data for the period prior to the financial crisis, and during the crisis? Do you think the current data are indicative of a bubble?
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Related Book For
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
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