Good predictor of future economic activity

Reference no: EM131098827

After reading the case study (attached doc), please answer the following questions (you also need to find Estrella's study from the NY Fed - a link is provided in the case study).

Also, you can use other sources as long as you cite them. To find the current yield curve (as well as historical yield curves you can go to https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx) (case study is attached)

Question 1.) Estrella (NY Fed) is quite certain that the yield curve is a good predictor of future economic activity. From the case, or the link to his FAQs, answer the following questions:
A.) How successful is the yield curve at predicting recessions?
B.) What matters most - the level of the term spread, the change in the spread, or the level of short term interest rates?
C.) Discuss why a yield curve inversion should lead to a recession.

Question 2.) Dick Berner (Morgan Stanley) is a bit more skeptical about the predictive power of the yield curve. Does he just not understand Estrella's overwhelming evidences, or does his skepticism rest on solid reasoning?

Question 3.) How is the U.S. yield curve currently sloped? What does it affect your forecast of economic activity?

Reference no: EM131098827

Questions Cloud

Cases in healthcare finance : 1. As a baseline, assume all cash flows have the same risk; that is, ignore residual value risk and use the same discount rate for all lessee and lessor cash flows.

Find the period of the clock in the moving system : Find the period of the clock in the moving system by direct calculation

Compare the different economic systems : Imagine you own a company and could choose the type of economic system your country uses. Create a 1,050-word comparison paper including:

Describe effects of the demographic trends : Describe how the major industries of 1) Vacation in Australia and New Zealand 2) Cosmetic and 3) Pre-cooked food are affected by the effects of the demographic trends-Present longer life span of senior citizen

Good predictor of future economic activity : After reading the case study (attached doc), please answer the following questions (you also need to find Estrella's study from the NY Fed - a link is provided in the case study).

Software implementation or project management : Security issues associated with big data in cloud computing - research and development is a problem solving exercise, differing it from software implementation or project management.

How long does it take the light to go from a to b : How long does it take the light to go from A to B?

Requirements and commitments of the company : Research and discuss the process of attaining an H-1B visa. What are the requirements of the employee? What are the requirements and commitments of the company? When does a it make business sense to support an H-1B visa for an employee?

Most recent financial reports of the chosen firm : Select a U.S. S&P 500 Company required to submit either 8-K, 10-Q, or 10-K U.S. Securities and Exchange Commission (SEC) reports. Before proceeding to Part Two, submit your firm selection to your instructor and obtain approval; completing this as..

User Account

All Pages