Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

V) Stock Market and Business Cycles Abel, Bernanke and Croushore, 10th edition, Chapter 8, Data Problems, No. 3. It has been argued that the stock

image text in transcribed
V) Stock Market and Business Cycles Abel, Bernanke and Croushore, 10th edition, Chapter 8, Data Problems, No. 3. It has been argued that the stock market predicts recessions. Using quarterly data since 1971, plot the real value of the stock market index (the Wilshire 500 index in the last month of the quarter divided by the GDP deflator). [Note that to convert daily FRED data into quarterly data, (1) go to the FRED page for Wilshire500 https://fred.stlouisfed.org/series/WILL5000PRFC; (2) click on Edit Graph on the right; (3) a dialogue box appears and you can select frequency (quarterly) and then can choose "aggregation method" (end of period); for the ratio of two series (1) go to customize data; (2) add GDP deflator as series b; (3) type in formula a/b and apply] Do you find the stock market to be a good economic forecaster

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker

10th edition

978-0078025624