During much of the post-war period, the Fed attempted to stabilize nominal interest rates. However, during 1979–1982 the Fed under Paul Volcker greatly reduced its emphasis on interest rate stabilization to focus on fighting inflation. Calculate and graph the quarter-to-quarter change in the three-month Treasury bill rate (i.e., the 3-Month Treasury Bill: Secondary Market Rate) since 1961. What happened to the volatility of interest rates in the 1979–1982 period? What has happened to the volatility of interest rates since 1982? Does your answer change if your measure of the interest rate is the ten-year government bond rate (i.e., the Long-Term Government Bond Yields: 10-year: Main (Including Benchmark) for the United States, Percent, Quarterly, Not Seasonally Adjusted)
During much of the post-war period, the Fed attempted to stabilize nominal
interest rates. However, during 1979–1982 the Fed under Paul Volcker greatly
reduced its emphasis on interest rate stabilization to focus on fighting inflation.
Calculate and graph the quarter-to-quarter change in the three-month Treasury bill
rate (i.e., the 3-Month Treasury Bill: Secondary Market Rate) since 1961. What
happened to the volatility of interest rates in the 1979–1982 period? What has
happened to the volatility of interest rates since 1982? Does your answer change if
your measure of the interest rate is the ten-year government bond rate (i.e., the
Long-Term Government Bond Yields: 10-year: Main (Including Benchmark) for the
United States, Percent, Quarterly, Not Seasonally Adjusted)
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