College Fed Challenge 2020

The College Fed Challenge 2020

Presented by: Suzanne Clarke, Aaron Dona, Declan Pattermann, Niamh McKevitt, Tim Henion & Federico Scaglioni
Faculty Advisor: Dr. Meghan Mihal, Professor of Economics & Dr. Rossen Trendafilov, Associate Professor of Finance

In October 2020, STAC gathered a team of six students working remotely from three different countries to participate in the nationwide College Fed Challenge competition. The ultimate goal was to create a compelling, yet practical, proposal for U.S. monetary policy that aligned with the Federal Reserve’s dual mandate of stable prices and maximum sustainable employment. To achieve this, we spent much of our time using the remote access to the Bloomberg Laboratory Terminals analyzing key economic trends in domestic production such as labor market conditions, unemployment, the productivity wage gap, and market volatility. In addition, the team also kept potential risks in mind, such as geopolitical factors, overall debt level, capital markets, and pressures relating to the COVID-19 Pandemic and the upcoming Presidential Election. In addition, the team kept potential global developments in mind such as emerging vaccines as well as possible effects of trade war. At the conclusion of our research, we compiled our findings and monetary policy suggestion into an informative research, coherent presentation that was recorded and submitted to the Federal Reserve Bank of NY. Our final recommendation for the Federal Open Market Committee was to hold course: maintain the current target fed funds rate, current interest rate paid on excess reserves, continue  to grow its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace, and  retain the new lending facilities to continue the ease of liquidity and stability in the economy.