Econ1530PS 2-1

Econ1530PS 2-1 - Problem Set #2 *Econ S-1530 Due July 8th,...

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Problem Set #2 *Econ S-1530 Due July 8 th , 2010 1. (40 points) Table 1 has a time series of H P , H B and the money stock multiplier for 1960-2009. For the purposes of this exercise, use M2 as money stock (i.e. M2 = M = D + H P ) a) Determine the money multiplier for the years 1960-2009. Does there seem to be any trend to the multiplier? c) Determine π and β for the years 1960, 1970, 1980 and 1990. Has there been a greater change in public behavior or in bank behavior? d) Determine the geometric average of the change in the multiplier per year for the years 2000-2007. If one assumed in 2008 and 2009 that the multiplier would continue to change at this rate each year, what would one have predicted the level of the multiplier to be in 2008 and 2009? How does this compare with the actual figure calculated in question (c) above? Please provide your comments on the consequences of what you observe for 2008 and 2009. Table 1:
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Econ1530PS 2-1 - Problem Set #2 *Econ S-1530 Due July 8th,...

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