Question: 3 . How reliably does an inverted yield curve anticipate a recession? How far in advance? Plot from 1 9 7 0 ( as in

3. How reliably does an inverted yield curve anticipate a recession? How far in advance? Plot
from 1970(as in Figure 7.7A) the difference between the 10-year Treasury yield (FRED code:
GS10) and the 3-month Treasury bill rate (FRED code: TB3MS). Discuss the variability of the
time between an inversion of the yield curve and the subsequent recession.
Hint: Enter GS10 into the FRED search box. Select the Edit Graph button and at the Customize data search box, enter TB3MS. When the full name appears, click it and then push the Add button. In the formula box, subtract variable (b) from variable (a), a-b, and then push the Apply button. Use the box for the starting observation date (to the left of the Edit Graph button) to start the plot at January 1970.

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