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Go to the following website and open the pdf file: http://www.federalreserve.gov/pubs/feds/2009/200949/200949pap.pdf This is a working paper entitled Monetary Policy and the Housing Bubble from Finance

Go to the following website and open the pdf file:

http://www.federalreserve.gov/pubs/feds/2009/200949/200949pap.pdf

This is a working paper entitled "Monetary Policy and the Housing Bubble" from Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board.

After reading the paper carefully,write a two-page essay based on the following questions:

What is the authors' position regarding the role of US monetary policy andthe housing market bubble during the early 2000's? Why?"

Cite references to material that you use in preparing the essay.

Your essay will be graded on the following:

  • Describe at least six of the following elements: (1) Low ratesaccompanied increase in demand for housing, (2) Loose versus tight monetary policy, (3) Taylor Rule, (4) Policy assessment and outcomes, (5) Rise of cheap and available credit stimulated housing demand, (6) Evaluate monetary policy by how effective it is in attaining goals, (7) Evidence that monetary policy played a role by the timing of housing boom, (8) Evidence that monetary policy played a role by economic simulation models, and (9) Evidence that monetary policy played a role by other research.
  • Discuss at least 2 of the following topics in discussing how we know that monetary policy played a role in housing market developments:
  • Timing of the housing boom
  • Economic simulation models
  • Other research
  • Use at least one example in the essay.
  • Organization Grading Guidelines: Presentation is very effective and presented in a logical format with a clear beginning, middle, and end. There is a clear statement of ideas and smooth transitions. The writer has stated the main idea clearly and has provided relevant details. The main idea is clearly conveyed in a presentation that is highly relevant and interesting. The student provides evidence of thoughtful input. Details are rich and appropriate. Spelling, punctuation, and capitalization are virtually always correct.

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