For this problem, you will use the Hodrick$-$Prescott $($HP$)$ filter discussed in class to make inferences

about the cyclical behavior of U$.$S$.$ Federal government expenditures. To do so$,$ download Federal

Government: Current Expenditures $($series ID: FGEXPND$)$ in an Excel file. Use quarterly data from

$1947$:Q$1$ to $2023$:Q$4.$

a$.$ In the Excel file, use the $=$HP$($array$,\backslash$lambda $)$ function discussed in class to obtain the HP trend$\mathrm{.}1$ Then,

obtain the deviations from trend $($i$.$e$.,$ the difference between the Federal Government: Current Expendi$-$

tures series and the HP trend$).$ Express it as percentages from the trend $($that is$,100\backslash$times deviation from trend

trend

$).$

Graph over time.

b$.$ Are the increases in government spending as a consequence of the Coronavirus Aid, Relief, and

Economic Security $($CARES$)$ of March $27$th$,2020$ and of the American Rescue Plan $($ARP$)$ of March

$11$th$,2021$ large, historically, in terms of percentage deviations from trend? Explain briefly $(2$ lines or

less$).$

c$.$ Do you think policymakers should devote their effort to reduce the trend of U$.$S$.$ government expen$-$

ditures or to reduce the fluctuations around trend? Briefly argue in favor of one or the other based on

class discussion $(4$ lines or less$)$