Go to the St. Louis Federal Reserve FRED database, and find data on the three month U.S. Treasury note (TB3MS), the three-month AA nonfinancial commercial paper rate (CPN3M), the federal funds rate (FEDFUNDS), and the total volume of assets on the Federal Reserve’s balance sheet (WALCL). Convert the balance sheet data frequency to “Monthly,” and download all the data into a spreadsheet. For each month, calculate the credit spread as the difference between the commercial paper rate and the Treasury rate. Create a series showing the year-by-year growth rate in the Fed balance sheet by finding, for each month, the percentage change in the value from the same month one year earlier.

a) For the most recent data available, calculate the average growth rate in the Fed’s balance sheet over the last year period, the level change in the federal funds rate from the same month one year earlier, and the average value of the credit spread over the last year period.

b) Repeat part (a) for the periods from January 2007 to January 2008 (pre-crisis) and September 2008 to September 2009 (crisis).

c) Compare the monetary policy responses of the most recent period, the pre-crisis period, and the crisis period.