Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and download the data series for the St. Louis Adjusted Monetary Base (BASE) from July 1959 until the most recent month available. In addition to the levels of the monetary base also find the compound annual rates of changes (choose “Edit Graph” and then under “Units” choose Compound Annual Rate of Change). Graph both the levels and the rates of change of the monetary base. Go to the web site of the National Bureau of Economic Research (nber.org) and find the dates for business cycle peaks and troughs. (The period between a business cycle peak and trough is a recession.)
a. What was the trend in the levels of the monetary base from 1959 through the most recent month available?
b. Describe how the levels of the monetary base change just before, during, and just after a recession. Is the pattern the same across recessions?
c. On the rate of change graph, which periods saw the most volatility in the monetary base?