Reference no: EM133719077

Part 1:
Get the data for Italy, Spain, and Germany from January 1990 to December 2021. You can do this yearly or quarterly. Just adjust the frequency on the graph to yearly or quarterly and the data will be generated. To get the yield spread you have to subtract the interest rate from Germany from both Italy and Spain. Graph these two spreads with the x-axis equals the time period. Discuss the spreads after 2008

Part  2:
Here you have two data sets. You have to plot one on the left vertical axis and one on the right vertical axis. Then, compare them. Do banks adjust lending conditions when household balance sheets improve or deteriorate? Read the graph.

Part  3
You have one data set (US public debt). Just discuss how public debt increases or decreases will impact the activities of the Federal Reserve Bank.

Part  4:
There are two curves, the Federal Funds Rate (FFR), and the Taylor Rule Rate (TRR). The FFR is straightforward. You download the data and graph it. The TRR must be calculated by a formula then you graph the calculated values.
The Taylor Rule Rate = r* + p + 0.5(p - p*) + 0.5(g - g*)
where
r* = real short-term interest rate (3-months)
p = current inflation
p* = target inflation rate
g = growth rate of real economy (gdp)
g* = potential growth rate of real economy (gdp)
You plug in those values and do the calculations and you will get the TRRs.
We assume that r* is 2 percent; p* is also 2 percent.
To get p, the inflation rate, you have to get the index data for personal expenditure per quarter and use that (FRED code: PCEPI). The author said that he used FRED code: JCXFE to draw his graph (look at his graph... he typed in the code wrongly...JXCFE...I could not find it at FRED, but I found JCXFE...) If you use JCXFE you may get a closer replica. So to get the inflation percent, you have to take the percentage change from a year ago. Everything is done quarterly... This will give you all the values for p. Then you have to subtract p* from p to get the inflation gap (p - p*) then multiple that difference by 0.5.
Now, we have to find the values for g - g*. This is call the output gap. You download real GDP and potential GDP. You can do the percentage change in each one and then subtract the percentage change of potential gdp from the percentage change of real gdp. That is the output gap. Now you have all the parts needed for Taylor's Rule to find the rates.
Get one column with the Taylor Rule Rates. This is the own that you graph along with the Federal Funds Rate.
Now, you can download the housing index AND add this graph on the RIGHT vertical axis.
Do discuss the housing situation... Did the Federal Reserve stimulated the housing bubble?

Part  5:
You have to get two data sets. To get real house prices, you have to take the Case-Shiller U.S. National Home Price index and divide it by the consumer price index. Graph the real house prices. Discuss real house prices. Also, tell us why housing matters in the financial system. The value of the housing sector is a good approach to answering this question.