Compute a column that shows the YoY inflation rate, as a monthly series.

Compute a column that shows the YoY inflation rate, as a monthly series.

HW 0

Full points: 40. Provide spreadsheet data, hide repetitive rows to reduce the number of pages to ONE (e.g., landscape mode; 5-point deduction otherwise). You must annotate each formula (in one row) to receive full or partial credit. Answer all questions in the order given (though all the data can be on one page at beginning; 1-point deduction otherwise). This is a slightly harder HW. All subsequent HWs follow the textbook and Connect.

Detailed discussion to follow in class.

Staple pages. Write your name on the front of the first page AND the back of the last page that you hand in [1pt].

1. [12pts] Google the St Louis Economics Database (“Fred II”) and download the monthly constant maturity 1-year and 10-year series (excel-format, denoted GS1 and GS10, respectively). Similarly, google the Bureau of Labor Statistics (“BLS”) and create a spreadsheet of the all-urban CPI (“inflation”) index.[footnoteRef:0] [0: For simplicity, use the all-urban, not seasonally-adjusted, all items index.]

a. Compute a column that shows the YoY inflation rate, as a monthly series.

b. Plot the monthly 1-yr CMT, 10-yr CMT, and inflation rate on a single graph, from (at least) the 1960’s through the present. Make sure that the x-axis matches the available data range.

c. Comment on the peak in the early 80’s and on the state of affairs from the late 90’s through the present.

1. [12pts] Recreate the real Case-Shiller index for the Los Angeles by similarly obtaining the necessary data from a web-search (Standard and Poor’s).[footnoteRef:1] Note that the index you download will be a nominal index. Show both the nominal and real indexes on one plot, using the earliest available Case-Shiller date as the base period. [1: SP/Corelogic now requires registration. If you do not want to do this, get the LA (not seasonally adjusted) index from FRED II (google FREDII Case Shiller).]
2. [11pts] Download the (not seasonally adjusted) monthly shelter component of CPI for LA/Orange/Riverside (or LA-Long Beach Anaheim). Plot the ratio of nominal price (from question 2) to cost of shelter index. Normalize the ratio to be 59.33 on Jan 1, 1987. What does this ratio tell you about rent inflation when compared to the real LXXR?
3. [4pts] How far are we currently from the 2006 peak (in percent), in nominal and real terms? Do you think we are back in a bubble? If so/not, why (not)?