ࡱ> .0- bjbj .rr66666JJJJ VJjjjjjEEEQSSSSSS$~0zw6EEEEEw66jjeeeE 6j6jQeEQee:,j%QO =0Re6$EEeEEEEEwweEEEEEEEEEEEEEEEE : Activity Handout Inflation Expectations Author Diego Mendez-Carbajo, Department of Economics, Illinois Wesleyan University dmendez@iwu.edu Step-By-Step Activity Description The user of the FRED database will take the following steps in order to quantify the concept of inflation expectations. (Step 1) The user will first generate a graph of the 30-Year Treasurys Inflation-Indexed Bonds (WTP30A28) (Category: Money, Banking & Finance > Interest Rates > Treasury Inflation-Indexed Securities) (Step 2) The user will then Add a Data Series > Add New Series, graphing the 30-Year Treasurys Constant Maturity Bond Rate (DGS30) (Category: Money, Banking & Finance > Interest Rates > Treasury Constant Maturity) (Step 3) The user will then Edit Data Series 2 (30-Year Treasurys Constant Maturity Bond Rate (DGS30)) by deleting it [click on trash can icon to the right of the series name]. Next, the user will Add a Data Series > Modify Existing Series > Data Series 1, graphing 30-Year Treasurys Constant Maturity Bond Rate (DGS30) (Category: Money, Banking & Finance > Interest Rates > Treasury Constant Maturity) These steps are needed in order to have both series as part of the same database object and allow for their manipulation. This manipulation is accomplished by selecting Create Your Own Data Transformation > Formula > b a > Apply The graph now plots the difference between non-inflation-indexed and inflation-indexed Treasuries, a computation of inflation expectations. Suggested Discussion Questions What average value did inflation expectations have before the 2008-2009 recession? What are the implications of such stable inflation expectations for bond prices? What average value did inflation expectations have after the 2008-2009 recession? Consider both the magnitude and the volatility of those figures. What are the implications of such volatile inflation expectations for bond prices? Further Sophistications Plot the difference between the 10-Year Treasurys Constant Maturity Bond Rate (DGS10) and the 10-Year Treasurys Inflation-Indexed Bonds (WTP10J14). Compare with the previous graph. Discuss how and why 10-Year and 30-Year inflation expectations are different. '()0     & ( ) 2 6 ; F O  ƺƺƲƲƲƺƃh&_h^h&OJQJh&5OJQJh nh&>*OJQJh nh&OJQJh&OJQJh-hh&5OJQJh-hh&OJQJh-hh&CJOJQJaJh nh&CJOJQJaJh-hh&5CJOJQJaJ,()0|( ) 2 h Q R  & Fgd&gd&$a$gd& & Fgd&gd& & Fgd&,1h/ =!"#$% j 666666666vvvvvvvvv666666>6666666666666666666666666666666666666666666666666hH6666666666666666666666666666666666666666666666666666666666666666662 0@P`p2( 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p8XV~ OJPJQJ_HmH nH sH tH J`J Normal dCJ_HaJmH sH tH DA D Default Paragraph FontRiR 0 Table Normal4 l4a (k ( 0No List H`H & No SpacingCJ_HaJmH sH tH PK![Content_Types].xmlN0EH-J@%ǎǢ|ș$زULTB l,3;rØJB+$G]7O٭V$ !)O^rC$y@/yH*񄴽)޵߻UDb`}"qۋJחX^)I`nEp)liV[]1M<OP6r=zgbIguSebORD۫qu gZo~ٺlAplxpT0+[}`jzAV2Fi@qv֬5\|ʜ̭NleXdsjcs7f W+Ն7`g ȘJj|h(KD- dXiJ؇(x$( :;˹! I_TS 1?E??ZBΪmU/?~xY'y5g&΋/ɋ>GMGeD3Vq%'#q$8K)fw9:ĵ x}rxwr:\TZaG*y8IjbRc|XŻǿI u3KGnD1NIBs RuK>V.EL+M2#'fi ~V vl{u8zH *:(W☕ ~JTe\O*tHGHY}KNP*ݾ˦TѼ9/#A7qZ$*c?qUnwN%Oi4 =3N)cbJ uV4(Tn 7_?m-ٛ{UBwznʜ"Z xJZp; {/<P;,)''KQk5qpN8KGbe Sd̛\17 pa>SR! 3K4'+rzQ TTIIvt]Kc⫲K#v5+|D~O@%\w_nN[L9KqgVhn R!y+Un;*&/HrT >>\ t=.Tġ S; Z~!P9giCڧ!# B,;X=ۻ,I2UWV9$lk=Aj;{AP79|s*Y;̠[MCۿhf]o{oY=1kyVV5E8Vk+֜\80X4D)!!?*|fv u"xA@T_q64)kڬuV7 t '%;i9s9x,ڎ-45xd8?ǘd/Y|t &LILJ`& -Gt/PK! ѐ'theme/theme/_rels/themeManager.xml.relsM 0wooӺ&݈Э5 6?$Q ,.aic21h:qm@RN;d`o7gK(M&$R(.1r'JЊT8V"AȻHu}|$b{P8g/]QAsم(#L[PK-![Content_Types].xmlPK-!֧6 0_rels/.relsPK-!kytheme/theme/themeManager.xmlPK-!0C)theme/theme/theme1.xmlPK-! ѐ' theme/theme/_rels/themeManager.xml.relsPK]   8@0(  B S  ?3PbJbRNb(wh^`OJQJo(hHh^`OJQJ^Jo(hHohp^p`OJQJo(hHh@ ^@ `OJQJo(hHh^`OJQJ^Jo(hHoh^`OJQJo(hHh^`OJQJo(hHh^`OJQJ^Jo(hHohP^P`OJQJo(hHh^`OJQJo(hHh^`OJQJ^Jo(hHohp^p`OJQJo(hHh@ ^@ `OJQJo(hHh^`OJQJ^Jo(hHoh^`OJQJo(hHh^`OJQJo(hHh^`OJQJ^Jo(hHohP^P`OJQJo(hHPbJNb                  &_&w@'@UnknownG* Times New Roman5Symbol3. * Arial7.@ Calibri?= * Courier New;WingdingsA$BCambria Math"h-&-&J]J]20KQHP  $P&2!xx Diego Mendez-CarbajoDiego Mendez-Carbajo  Oh+'0 ( H T `lt|Diego Mendez-Carbajo Normal.dotmDiego Mendez-Carbajo1Microsoft Office Word@@V Q@V QJ]՜.+,0 hp  Lenovo  Title  !"#$&'()*+,/Root Entry F-%Q11Table WordDocument.SummaryInformation(DocumentSummaryInformation8%CompObjr  F Microsoft Word 97-2003 Document MSWordDocWord.Document.89q