Select any combination of variables by clicking on the check-boxes or the variable name. Note: You may choose a maximum of two variables.
Click on the Plot Data to plot the graph.
Toggle the Show Recessions button to highlight recession years.
Toggle the Series Statistics button to display simple descriptive statistics on each selected variable.
Click on the Yield Curve button to display the Yield Curve for a particular quarter. By using your mouse-cursor to drag on the slider button below the years on the horizontal axis of the data plot, you will be able to select any date between 1960:1 and 2004:2.
Click on the Scatter Plot button to toggle on or off a scatter plot of the two chosen series. Please note: you must select two variables to use this feature. The green cross-lines pin-point the current quarter selected by the slider described in 5). A sample correlation measure is displayed in this scatter plot window.
Press Reset to start over.
Questions:
Plot the three-month Treasury bill (T-bill) rate and click on the show recessions button. What do you observe happening to nominal interest rates during recessions?
Graph the 10-year T-note rate and the 3-month T-bill rate together and click on the show recessions button. What happens to the gap between the two yield series just before recessions?
Hit reset. On the left, select the yield curve button and click the show recessions button. On the right-hand side, start with a non-recession year and slide the bar at the bottom to the right. What do you observe happening to the shape of the yield curve as you move towards the shaded recession area? Compare the slope of the yield curve in Q4, 1994 and Q4, 2000. What theory of the term structure could you use to explain why the yield curve is flatter in 2000?
Plot the 10-year T note and the Moody's Baa rate together and click on the show recessions button. What tends to happen to the gap between these two yield series during recessions? Look at the gap during the 2001 recession versus the gap at the most recent date. Using this information, what would you say about current economic conditions?
