MONETARY POLICY DURING TIMES OF CRISIS

MONETARY POLICY DURING TIMES OF CRISIS
Final Report Project
Overview and Timeline: The second half of this course revolves around monetary policy, central banks, economic theory, and international finance. This
report serves as the capstone for this second half in place of the traditional final examination. Your paper/presentation will need to be uploaded to
Blackboard by Friday, May 13th at 11:59pm.
Discussion and Purpose: The purpose of this report is to familiarize the students with the response of monetary policy to a variety of historical events of
crisis. In the process of analyzing the monetary policy response to a crisis, most economists will look at the events leading up to the crisis and the central
bank’s response to the crisis itself. The final portion of the analysis will reflect on the success of the chosen strategies. This report should follow a similar
structure with a discussion of relevant topics including:
The Great Inflation – This period lasted from the mid-1960s until the mid-1980s.
• What occurred in the 1960s and early 1970s that facilitated significant increases in inflation?
• Where did the term “stagflation” come from and what does it mean?
• How did the Federal Reserve prior to Paul Volcker respond to the oil crisis and stagflation?
• What did Paul Volcker do differently from his predecessors that helped combat the inflation?
• How effective was his approach and what did it teach us about monetary policy?
The 2008-2009 Financial Crisis – This period can include the housing crisis and the great recession.
• What events took place prior to 2008 that set the stage for the housing and financial crisis?
• What role might Alan Greenspan and the Federal Reserve have had in the formation of the housing bubble?
• How did Ben Bernanke respond to the early warning signs of the housing collapse and the oncoming financial crisis?
• How did the Federal Reserve use their three primary tools and what new tools or strategies did they have to incorporate to address the collapsing financial
industry and markets?
• How effective was this approach and what did it teach us about monetary policy?
The Coronavirus Crisis in the United States – This period will start in January 2020 as the world became aware of Covid-19 and continue through today.
• How did the Coronavirus epidemic unfold within the United States between January and June 2020? What was the initial response of the Federal Reserve to
growing economic fears?
• What additional actions did the Federal Reserve take as they noticed problems in debt markets and money markets?
• Why was liquidity such a huge factor in the Federal Reserve’s response to the crisis and how did this impact their asset purchase programs?
• Since this crisis is still taking place, provide the major arguments in support of the actions the Fed took and against the actions taken by the Fed.
The Coronavirus Crisis in Europe – This period will start in January 2020 as the world became aware of Covid-19 and continue through today.
• How did the Coronavirus epidemic unfold within the European Union between January and June 2020? What was the initial response of the European
Central Bank to growing economic fears?
• What additional actions did the ECB take as they noticed problems in the debt markets and money markets?
• Why was liquidity such a huge factor in the ECB response to the crisis to include asset purchase programs and US Dollar currency swap programs?
• Since this crisis is still taking place, provide the major arguments in support of the actions the ECB took and against the actions taken by the ECB.
Final Deliverables: There are three components to this report.
1) An executive summary – A two (2) page summary of the findings of your report geared toward a high level executive.
2) A 15 minute presentation that summarizes the findings of the report. (Video, Powerpoint)
for (2) that’s my responsibility
3) The formal report in complete form including all graphs, tables, and infographics along with appropriate citations. *Professional images only, avoid
cartoons*
include references as well
APA Format: The formal report needs to adhere to the formatting and style guidelines of the American Psychological Association (APA). This includes a title
page, main body, and references. The following links are for the APA website and the OWL at Purdue reference website.