Discussion 03

IP Due Saturday 11/9; IR due Sunday 11/10; FP due Monday 11/11 At the bottom of this page you can download a word file of this discussion.

For this discussion you are to answer either question A. or Question B. bellow. Please note that Question A has many sub-parts and relates to the relationships of Chapter 17 relating to the money supply process. Please note that question B attempts to take a current news item and put it into the topics raised in Chapter 16. While question A. asks you to look at some empirical data, really you don’t need to do any analysis but give it a good look-see please.

1. The material in Chapter 17 is kind of a traditional approach. It relies on balance sheet measure of profit maximizing behavior of banks, and on the regulation by the FED. For this discussion question I want you to consider some values and changes in values for some of the key parts of activity by the FED and by Banks as mentioned in Chapter 17.
   1. For this part I want you to look at some data easily available and provide some descriptions. For part b you are going to be asked to use those descriptions to make a conclusion about the changing value of the money multiplier. In part c. you are going to be asked if your expectations about the money multiplier were met by the data you saw and explain why or why not.
      1. Take a look at FRED and think about the series “Excess Reserves” available at https://fred.stlouisfed.org/series/EXCSRESNS Note the variable name in the FRED data base is EXCRESNS
         1. Provide a description as to the behavior of excess reserves over the period from 2006 to 2019. Note the series was never exactly zero.
      2. Take at look at FRED and think about the series “Monetary Base Total” available at https://fred.stlouisfed.org/series/BOGMBASE Note the variable name in the FRED data base is BOGMBASE.
         1. Provide a description as to the behavior of the monetary base over the period from 2006 to 2019.
         2. How does this observation match with your answer to what you learned about “excess reserves” in the prior sub-question.
      3. Take a look at FRED and think about the series “Interest Rate on Excess Reserves” available at https://fred.stlouisfed.org/series/IOER Note the variable name in the FRED data base is IOER.
         1. Provide a description as to the behavior of interest rates paid on Excess Reserves over the period from Jan 1, 2009 to 2019. You might need to re-set the starting date in Fred to 2008-10-2
   2. How would you expect the trends in excess reserves, monetary base total, and interest rate on excess reserves to impact the money multiplier where the money multiplier is as described in Chapter 17? See equation 5 section 17.7.
   3. If you take a look at the money multiplier value, shown in FRED at https://fred.stlouisfed.org/series/MULT for say from 2000 up until today, are your expectations met regarding the value of the money multiplier met or not? Either way please provide a full explanation.
2. This question has many parts and each addresses the relationship between the President of the US and the Federal Reserve. For reference the mission of the Federal Reserve is stated at https://www.federalreserve.gov/publications/gpra/2011-mission-values-and-goals-of-the-board-of-governors.htm#subsection-142-21B7B547 .
   1. How many members are there to be, by charter, on the Board of Governors of the Federal Reserve? How many members are there currently? If there is a difference between what the charter says and what we currently have, why is there a gap?
   2. Citing the mission of the Fed, explain how there could easily be a difference in opinion between the President and the Federal Reserve about what actions are appropriate for the economy.
      1. Find one citation of a publicly available source describing an issue that President Trump and the Federal Reserve don’t agree on.
      2. Explain what President Trump wants and why he wants that course of action.
      3. Explain what the Fed wants and why they want that course of action.
   3. Can you provide documentation of Presidents who served before President Obama, i.e. in time before the Obama administration who disagreed with the Federal Reserve? Please explain briefly the setting of the disagreement and include a citation of source.

You can download a Word version of this discussion here.

Everything you need to know about these Discussions, ECON 720

There are 3 links that may be of interest to you on this page. The first is a listing of the team composition for discussions, the second is a discussion example, the third is a discussion grading guide. As the semester progresses there will also be suggested answer guides to discussions.

A listing of the membership of the discussion groups (named after shapes) is available. Also, most the discussion group membership should appear as part of the discussion description.

There are some “how to” and “what is expected information below, following that please find, after due dates, suggested answers to the discussions assigned.

• How do we “discuss” things in ECON 720? The answer is that we need to have things organized to motivate and allow for individual participation. As such there are 3 participation points for your discussion participation. There is an IP section, and IR section, and an FP section. While these are summarized below, find in the last bullet point a link to an example of a discussion.
  • IP. An initial post (IP) from each student, which is the equivalent of homework question presented to a face-to-face class and
  • IR. Dialogue posts, called inquiry and reflection posts (IR) which take the place of class discussion in a face-to-face class and follow the form of a web conversation. For each discussion, all students must write both an initial post and an inquiry and reflection post, yes you can do more than one IR post. Your discussion grade will depend on each of these components. Your IR post must be in response to an IP posting by another student. If there are no responses to your IP by the closing time for IR posts you don’t need to write an FP post.
  • FP. You are also expected to make a final post (FP), which is a response to one IR post addressing your IP posting.
  • You can find an example of a discussion posting here complete with IP, IR, and FP.
• While setting forth a rigid rubric is next to impossible for discussions, there is a suggested discussion grading on the Sakai pages for the course.
• No big surprises there we look for originality and critical thinking in the posts.
  • Also in the week 0 section of the Sakai Course page there is a discussion example.
  • Usually there will be a suggested answer guide to each IP.
  • Over the past few years I have learned that most deviations in grading patterns emerge from students missing one of the 3 required postings for each discussion
• If you are interested in posting a picture in your discussion, where a picture means any type of graphics file you can get instructions here.. Remember you need to have a graphics file and you need to upload it into sakai and then you need to set the permissions for the file to “public”.