Think you’re smarter than Yellen? Play ‘Chair the Fed’

The Myanmar Times - - International Business -

FED up with the end­less talk about in­ter­est rates and in­fla­tion? Think eco­nomic growth could be faster? Think you can do mone­tary pol­icy bet­ter than Fed­eral Re­serve head Janet Yellen?

Then try “Chair the Fed”, a new on­line game that chal­lenges your abil­ity to man­age an econ­omy.

The game puts your hand on the in­ter­est rate lever and tests how ef­fec­tive you would be man­ag­ing unem­ploy­ment and in­fla­tion – and whether, as for­mer Fed chair Wil­liam McCh­es­ney Martin once said of the Fed’s cen­tral duty as a spoiler, you are ready to re­move the punch bowl just as the party gets go­ing.

The game was put on­line as a tool for eco­nom­ics and other stu­dents by the Fed’s San Fran­cisco branch, avail­able at www.frbsf. org/ed­u­ca­tion/teacher-re­sources/ chair-fed­eral-re­serve-econ­o­mysim­u­la­tion-game.

“Our hope is that the ‘Chair the Fed’ game will in­spire stu­dents of all ages to take an in­ter­est in mone­tary pol­icy,” said Jody Hoff, di­rec­tor of ed­u­ca­tion and out­reach at the San Fran­cisco Fed.

For hard core gamers, the tech­nol­ogy is an­cient, but it gives a good idea of some of the chal­lenges with the Fed’s mis­sion.

As the newly ap­pointed Fed chair, the player has to fig­ure out if the mo­men­tum in in­fla­tion at, say, 2.3 per­cent, re­quires a pre­emp­tive rate in­crease, or how far to cut rates as job­less­ness edges above 5pc.

As a rate de­ci­sion is posed each quar­ter, you mean­while are buf­feted by al­ter­nat­ing com­fort­ing and un­nerv­ing head­lines: “Tight job mar­ket sug­gests more in­fla­tion ahead” or “Econ­omy in con­trac­tionary spi­ral”.

The game gives you a Fed chair’s nor­mal four-year term to keep both job­less­ness and in­fla­tion sta­ble, as is the Fed’s man­date.

When you fail – unem­ploy­ment rock­ets to 9pc or de­fla­tion sets in – it de­liv­ers the hum­bling mes­sage: “Sorry. Be­cause of dis­ap­point­ing eco­nomic re­sults, you have not been reap­pointed.” –

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