Organisation:
The class is divided into three groups, Group A, Group B and Group C.
Each class member in each group is assigned a role.
Some roles demand more time and effort than others. Therefore, on completion, an additional 5% will be allocated to the chair, an additional 3% to the manager of SOMA and an additional 3% to the Director of Research and Statistics.
Each group performs a role play of an FOMC meeting in a separate session. Students are encouraged to work collaboratively with their ‘opposite number’ from the other group (e.g: The Chairman from Group A, the Chairman from Group B and the Chairman from Group C prepare for their role together and perform their role separately).
Group A: Wednesday 17th November at 15.00 -16.00 in Old Board Room
Group B: Friday 19th November at 10.00 -11.00 in Old Board Room
Group C: Friday 19th November at 11.00 -12.00 in Old Board Room
Group A, B and C: Wednesday 24 November @ 15.00. Class discussion on role play in Room 1031.
Please bring an A4 sheet folded length wise with your assigned role typed in large font to the FOMC meeting.
Please be ready with all materials on the hour. Grades will be reduced for groups or individuals not ready to start on the hour. This means being in the class BEFORE the hour begins and having all slides, documentation etc. prepared and ready to go.
Assessment: Worth 40%.
Three individual entries in your portfolio: See Portfolio Guidelines and Full Checklist and FOMC Roleplay Assessment Form.
1. Group discussion: Reflective: 500 words.
2. Class discussion: Reflective: Groups A, B and C reconvene and discuss their respective role play. Each student takes notes and contributes to discussion. This forms the basis of the student’s individual portfolio entry. 1000 words.
3. Individual reflection: Please download the reflection sheet and complete.
Include documentation you and/or your group generated for the activity, for example, minutes of preparatory meetings detailing those present etc., speeches, ppt slides
It is important to note that if you have not been attending class, you cannot participate in the roleplay and you will be allocated 0%.
Learning Outcomes:
• Appraise various monetary policy strategies
• Identify and assess various monetary policy instruments
• Integrate contemporary central banking issues into the curriculum
• Write, present and defend material that articulates ideas, insights, economic analysis and economic policy to audiences, using a variety of business media
• Act as part of a team, taking initiative and responsibility for the work of others through participation in a group presentation
• Reflect on the performance of themselves and colleagues in the completion of tasks by engaging in reflection reporting before and after the roleplay and the rigorous defense of economic arguments and analysis
Download the following six documents from learnonline (Topic 4: Contemporary Issues Section) two weeks before the role play:
1. A day in the life of the FOMC
http://www.philadelphiafed.org/education/teachers/resources/day-in-life-of-fomc/
2. The press release for the Federal Reserve FOMC meeting 21st September released 21st September 2010.
http://www.federalreserve.gov/newsevents/press/monetary/20100921a.htm
3. The minutes for the Federal Reserve FOMC meeting 22-23 September released 12 October 2010.
4. Reflection Sheet
5. Portfolio Guidelines and Full Checklist
6. FOMC Roleplay Assessment Form
Tip: Check out the Bank of England competition website which helps to prepare students to take on the role of the Bank of England's Monetary Policy Committee. Remember the Federal Reserve has a different objective to the Bank of England. http://www.bankofengland.co.uk/education/targettwopointzero/index.htm
It is important to note that if you have not been attending class, you cannot participate in the roleplay and you will be allocated 0%.
Role Play Participants:
1. Ben Bernanke, Board of Governors, Chairman (Voting)
2. William Dudley, President Federal Reserve Bank of New York, Vice Chairman (Voting)
3. James Bullard, President Federal Reserve Bank of St Louis (Voting)
4. Elizabeth Duke, Board of Governors (Voting)
5. Thomas Hoenig, President Federal Reserve of Kansas City (Voting)
6. Sandra Pianalto, President Federal Reserve Bank of Cleveland (Voting)
7. Eric Rosengren, President Federal Reserve Bank of Boston (Voting)
8. Daniel Tarullo, Board of Governors (Voting)
9. Kevin Warsh, Board of Governors (Voting)
10. Charles Evans, President Federal Reserve Bank of Chicago (Not voting)
11. Brian Sack, Manager of SOMA (Not voting)
12. David J. Stockton, Director of Research and Statistics (Not voting)
13. Brian F. Madigan, Director of Monetary Affairs (Not voting)
14. Richard W. Fisher, President Federal Reserve Bank of Dallas (Not voting)
Alternate Members
o Charles L. Evans, Chicago
o Narayana Kocherlakota, Minneapolis
o Charles I. Plosser, Philadelphia
o Christine M. Cumming, First Vice President, New Yor
Role Play
Chairman of the BOG you must:
Call the meeting to order.
Ask the Manager of SOMA to report on recent developments.
Ask the Director of Research and Statistics to report on the staff’s forecast for the U.S. economy.
Ask each FRB president to make a one-minute comment on his/her view of the economy, expressing concerns about specific factors and how these might affect inflation or output in the future.
Ask each member of the BOG to comment on the economy.
Ask the Chairman of the BOG to go last and to draw some consensus regarding the comments of the other members of the FOMC.
Ask the Director of Monetary Affairs to offer the three options regarding the federal funds rate to the committee.
Read the entire press release of the statement and then ask the governors and presidents if they agree.
(Note: This is not a formal vote but a head nodding or brief discuss can take place.)
Direct the SOMA Director to conduct open market operations to achieve the intended federal funds rate.
Adjourn the meeting.
Manager of SOMA you must report on recent developments using content from the minutes. This should include commenting about:
Economic activity
Employment data such as nonfarm payrolls and the unemployment rate
Industrial production
Real consumer spending
Residential construction
Real spending on equipment and software
Manufacturing data
U.S. international balance of trade, i.e. trade deficit, economic activity in foreign countries, and
A review of the last FOMC target for the federal funds rate.
Director of Research and Statistics you must report on the staff’s forecast for the U.S. economy using content from the minutes. Include information about:
The outlook for output, i.e. growth of real GDP,
Consumer and business spending,
Resource utilization,
Inflation,
Federal expenditures, and
Labor markets.
Each FRB president must make a two-minute comment on:
Your view of the overall US economy, expressing concerns about specific factors and how these might affect inflation or output in the future. Pick out something from the content covered in the minutes by the Director of Research and Statistics’ report. For discussion purposes, any spending increases or prices level increases may be seen as adding inflationary pressures, and decreases in production, economic activity or spending may be seen as creating concern regarding recession or a slowing economy.
Research Directors and Board Staff: During the FOMC discussion, take notes regarding the main points made and by whom during the discussion. Be prepared to share this information during the class discussion at the end of the role play.
Each member of the BOG (including the Chairman) who will make his/her comments last) must make a two-minute comment on:
Your view of the economy, expressing concerns about specific factors and how these might affect inflation or output in the future. Pick out something from the content covered in the minutes by the Director of Research and Statistics’ report. For discussion purposes, any spending increases or prices level increases may be seen as adding inflationary pressures, and decreases in production, economic activity or spending may be seen as creating concern regarding recession or a slowing economy.
Chairman of the BOG you must draw some consensus regarding the comments of the other members of the FOMC.
Director of Monetary Affairs you must offer the following three options to the committee:/
Raise the federal funds target ¼ % (which is 25 basis points)
Keep the federal funds target the same
Lower the federal funds target ¼% (which is 25 basis points)
(Note: These are not always the options in actual meetings but may be used in this simulation.) Then ask all of the BOG, the FRB New York president and the following FRB presidents to vote on the options. (Note from p. 5 of A Day in the Life of the FOMC that the FRB New York president always votes, but the other eleven presidents vote on a rotating basis.)
Presidents of the FRB St Louis, FRB Kansas City, FRB Cleveland and FRB Boston you must vote when requested to do so.
Chairman of the BOG after the vote distributes copies of the press release to those sitting in the oval, as well as research directors and BOG staff.
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