Question: Go to FRED database and find data on the 1-year Treasury Rate (GS1) and the GDP Deflator price index (GDPDEF). For GS1 choose the frequency

Go to FRED database and find data on the 1-year Treasury Rate (GS1) and the GDP Deflator price index (GDPDEF). For GS1 choose the frequency setting as quarterly; for the (GDPDEF) set the units setting to Percent Change From Year Ago; and download both data series. For the questions below assume inflation is a good proxy for inflation expectations.

a) From the current period of data available, compare inflation and the interest rate to what it was in 2010: Q1. Does the Fisher effect hold? Why or why not?

b) From the current period of data available, compare the inflation and the interest rate to what it was in 1990: Q1. Does the Fisher effect hold? Why or why not?

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