Using data from the St. Louis Federal Reserve (research.stlouisfed.org/ fred2/) FRED database, examine the experience of the U.S. economy during the 1990s. The U.S. economy experienced a positive supply shock with the spread of information communication technology and the Internet after 1995.
a. Download monthly data on the Personal Consumption Expenditure Price Index (PCEPI) from 1981 to the present. Calculate the inflation rate from 1982 to 2007 as the percentage change in the PCEPI from the same month in the previous year.
b. Calculate the average inflation rate from 1982 through 1994 and the average inflation rate from 1995 through 2007.
c. Are your calculations consistent with a positive supply shock after 1994? Briefly explain.