In this box you will connect the earlier labor market box to monetary policy before, during, and after the financial crisis.
1. Go to BLS.gov and look for:
2. the Unemployment Rate
3. the Consumer Price Index (inflation).
Once in the CPI page go to More Formatting Options and request the 12 Month Percent Change.
-Get the Effective Federal Funds Rate from the St. Louis Federal Reserve Bank FRED database.
The relation between interest rates, unemployment, and inflation is clearly stated in this Federal Reserve – PLEASE SEE ATTACHED
The purpose of the box is to analyze these variables within a common framework with emphasis on the Fed’s mandate during the Great Recession with the Taylor Rule in mind. Make sure you plot the variables separately. The charts should have a title and have the axis labeled (with time in x-axis, and label the variable and its units in the y-axis).
SHORTCUT:
The Federal Reserve Bank of St. Louis compiles and stores economic data from many sources, including the Bureau of Labor Statistics. One-stop shopping for the data in this box can be found here:
https://fred.stlouisfed.org
The series are:
– Unemployment Rate (UNRATE)
– Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL) —it is in levels, so you have to go to Edit Graph and in Units request it as “Percent Change from a Year Ago” to have the year over year change in prices.
– Effective Federal Funds Rate (DFF) —it is in daily frequency, so you have to request it as monthly to match the other variables.
You can use the ready-made charts from FRED, though I encourage you to develop further your graphing and communication skills in Excel.
Tips/Must Haves
https://fred.stlouisfed.org/series/FEDFUNDS – the link to get the effective federal funds rate
Download the CPI table from the BLS.gov and use it to plot my line graph in Excel
The link is on the right side mid-way down the page in the LATEST NUMBERS section (click on the tiny graph icon for the CPI). Then, change the date at the top of the page, and then in More Formatting Options, select the 12-month Percent Change, then Retrieve Data. Or you can also take the SHORTCUT to the ready-made graphs at the bottom of the Assignment’s instructions and use them in your Box without point penalty.
