2. During much of the postwar period, the Fed attempted to stabilize nominal interest rates. However, during

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2. During much of the postwar period, the Fed attempted to stabilize nominal interest rates. However, during 1979–1982 the Fed under Paul Volcker greatly reduced its emphasis on interest rate stabilization to focus on fighting inflation.

Calculate and graph the quarter-to-quarter change in the three-month Treasury bill rate since 1961. What happened to the volatility of interest rates in the 1979–1982 period? What has happened to the volatility of interest rates since 1982? Does your answer change if your measure of the interest rate is the ten-year government bond rate?

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Macroeconomics

ISBN: 126164

8th Edition

Authors: Andrew B. Abel, Ben Bernanke, Dean Croushore

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