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.

Present an 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?"

• Describe 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 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.