Topic: Macroeconomics

Order Description

The Great Recession (GR) lasted from December 2007 until June 2009. You know from this course that the GR was the longest, deepest, and most severe recession since the

Great Depression. However, it was unclear in mid-2008 that the economy was actually going to experience a severe recession, based on the information available at the

time. The FOMC reacts to both current data and forecasts for what is to come in formulating its policy. To get a taste of what the Fed faces when the economy takes

surprising turns, please read the statements of the FOMC (Federal Open Market Committee) from 2008 for June, August, September, October (two statements) and December.

The link: https://federalreserve.gov/monetarypolicy/fomchistorical2008.htm Set out in a narrative what the Fed discovered the economy was doing and the policy actions

it pursued to deal with the change in the economy. (4 pages)

compare what the Fed forecasted for the economy with what actually happened. On page 11 of the pdf for the Fed minutes of the June 25 meeting

(https://federalreserve.gov/monetarypolicy/files/fomcminutes20080625.pdf) the Fed set out its forecast for 2008 and 2009. Compare the forecasts of the Fed with

actually happened in the US in 2008 and 2009 for GDP on an annual basis. Then compare the actual unemployment rates of, say, December 2008 and December 2009 with the

annual forecasts the Fed made in this June forecast. Comment on what you find and speculate on why the forecasts could be so… well, wrong! Use FRED (Federal Reserve

Economic Data) as your data source. (1 page)

Just use the 2 sites indicated in the instructions, no need for other resources.

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