Question: The difference between the Moodys Aaa bond rate and the 10- year Treasury bond rate is a measure of the risk premium of corporate over

The difference between the Moody’s Aaa bond rate and the 10-

year Treasury bond rate is a measure of the risk premium of corporate over government debt. Calculate and plot this time series and indicate the NBER recession dates with shading. What are the cyclical characteristics of this series?

Do they suggest a channel of monetary policy related to the broad credit channel? Explain.

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