Monetary Policy Statement
Total Points = 2000
You are the Chair of the United States Federal Reserve. After a thorough analysis of the US economy, you are preparing to testify before both houses of Congress. Given your view of the economy, your testimony entails a description of the Fed’s proposed monetary policy over the next 1-2 years.
Your monetary policy should be no more than five pages, single-spaced, Times New Roman font, with one-inch margins on each edge. Your spelling and grammar must be flawless. Each paragraph must start with a bolded thesis sentence, and the rest of the paragraph must support the thesis.
Your paper must show a combination of analytical thinking (let numbers tell your story), compelling narrative, and logical deduction. In preparation, you will need to begin with rigor, simplify using a theoretical framework, and end with clarity, compelling readers of the validity of your position.
This paper should be written in essay format. You do not need to cite any sources. You must produce your graphs in Microsoft Excel and copy and paste them from Excel into your paper. Please do not copy and paste them from a website or other source. It would be best if you made the graphs yourself. At least two graphs must have shaded areas for recessions.
This assignment is worth 200 points. They will be assessed in the following manner.
Spelling and Grammar. Fifty points will be deducted for any spelling errors. Egregious grammatical errors will also result in a fifty-point deduction. A cursory editing exercise should have caught a grammatical, egregious mistake. (Only negative points)
Policy Elements. You must address the following monetary policy elements: target interest rates, balance sheet expansion or contraction, and open market operations. Include references to current economic and political influences on your policy elements. In this section, you should discuss the policy tools available to the Fed and their potential impact. (500 points)
Economic Elements. Addressing the inherent trade-offs between policy elements and the Federal Reserve’s dual mandate would be best. Be sure to discuss inflation, unemployment, and recession. In this section, you should explain the economic impact of each policy element discussed. (500 points)
Proposed Policy. It would be best to propose a monetary policy for the next 1-2 years. Your proposed policy must include interest rate targets, balance sheet levels, and open market operations. (500 points)
Forward-Looking. It would be best to discuss your proposed policy’s impact on the Federal Reserve’s dual mandate. (500 points)
Extra Credit. An exceptional award of fifty points may be assessed for uncommon clarity.
