Do you think that the current data are indicative of a bubble?

Project and Presentation No.7 The objective of this project is to evaluate the student’s ability to collect, present and analyze economic information, using definitions, concepts, models and other tools provided in this course. Project: These instructions include the information that you will need to collect, present, and analyze, and the questions on the topic. In your project, you can include additional information that you might think will help the presentation and analysis of the topic. Please type the written portion of your answers. There will be a limited number of words for each answer. To support your answer you can use charts, graphs and tables, and these words and characters will NOT be counted within the word limit of your written portion. Your grade will depend on the adequate use of all economic concepts and models discussed in class in this project. IMPORTANT: You need to submit the written portion of your project in Word and the statistical part in an Excel Spreadsheet. Both files need to be named ECN301 (last name first initial). Please also send me a copy of your PowerPoint presentation named in the same way. Deadline for the Project: Monday, October 17, 2016 (before taking the final exam). Presentation: Your presentation needs to be in a Power Point format, and it should last no more than 15 minutes. There will be a 5-minute period after your presentation when the instructor and students in class will ask questions. The presentation will take place on Monday, October 17th after the final exam and the order will be determined by drawing the students’ names. I will open the possibility to students to present on Monday October 10th . Evaluation Your grade on the project and presentation will have a weight of 20% in your final grade for the course. The project and presentation will be graded separately and then averaged with weights 60% and 40% respectively. Instructions and Questions: Go to the St. Louis Federal Reserve FRED database, and find data on: – House Prices (SPCS20RSA), – Stock Market (SP500), – Measure of Net Wealth of Households (TNWBSHNO), and – Personal Consumption Expenditures (PCEC) For all four measures be sure to convert the frequency setting to “Quarterly”. Download all the data into a spreadsheet, and make sure the data align correctly with the appropriate dates. For all four series, for each quarter, calculate the annualized growth rate from quarter to quarter. To do this take the current-period data minus the previous-quarter data then divide by the previous-quarter data. Multiply by 100 to change the results to percentage form, and then multiply by 4 to annualize the data. a) For the four series, calculate the average growth rate over the most recent four quarters of data available. Comment on the relationships among house prices, stock market, net wealth of households, and consumption as they relate to your results. Describe and explain these relationships. (Limit: 600 words) b) Repeat part a) for the four quarters of 2005 and again for the period from 2008:Q3 to 2009:Q2. Comment on the relationships among house prices, stock market, net wealth of households, and consumption as they relate to your results, before and during the crisis. Describe and explain these relationships. (Limit: 600 words) c) How do all these current household data compare to the data from the period to the financial crisis, and during the crisis? Do you think that the current data are indicative of a bubble? [In the class we have talked about financial crisis, can you point out some characteristics that show the presence of a financial crisis?] (Limit: 800 words)

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